core-satellite benchmarks specific, question, identify

Carson

"The idea behind a core-satellite approach is that active risk is mitigated by the core, while active return is added by the satellites. The core is benchmarked to the asset class benchmark, whereas the satellites are benchmarked to a more specific benchmark."

In the context of the sentence, what is an "asset class benchmark" and what is a "more specific benchmark"? I want to be able to identify each if I see it in a question. THanks.

ohai

asset class benchmark would be a broader index , like the Russell 3000 ( an all market index ) or Lehman Bros Aggregate Bond Index.

The more specific benchmark would be the specific style or sector based benchmark the satellites are following , such as a Russell Large Cap growth style or Corporate AA Bonds in the US.

Easy enough to thing : Broader means asset class , style/sector means specific benchmark

susana

Jana is on fire! well done.

infinitybenzo

janakisri Wrote:
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> asset class benchmark would be a broader index ,
> like the Russell 3000 ( an all market index ) or
> Lehman Bros Aggregate Bond Index.
>


It's BarCap Agg Bond Index now