Core Holding


DEFINITION of 'Core Holding'

A long-term investment that forms the foundation of an investor's portfolio. A common core holding strategy is to primarily own an investment that tracks the overall market, such as an S&P 500 index fund, and secondarily own investments that may deviate from the overall market, such as individual stocks. These secondary investments are called satellite holdings. A solid core holding gives an investor the flexibility to take a chance with riskier investments in other areas of the portfolio.

BREAKING DOWN 'Core Holding'

A properly constructed core/satellite portfolio will tend to outperform a portfolio consisting solely of individual stocks, since most investors are poor at assembling a properly diversified portfolio from stocks alone. A core/satellite strategy also results in a portfolio that is easy to monitor and rebalance because it only contains a few investments. The strategy minimizes volatility, which limits the negative effect of taxes and trading commissions on returns.

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