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Put satellites in your Isa

If you've worked out your main Isa allocations you may want to add some small allocations to less mainstream assets to boost growth and lower risk through diversification.
March 26, 2012

If you've worked out your core allocation to mainstream assets such as equities and bonds you may want to allocate a small portion of your individual savings account (Isa), perhaps 5-10 per cent, to more unusual areas. This can provide some added return and reduce risk through diversification. This method of portfolio construction is known as 'core and satellite' investing.

Even if you have a smaller Isa portfolio you could invest the bulk of it in one or two multi-asset funds and then put a small portion in some more unusual funds, adding to them as the size of your Isa grows.

Or you could use exchange-traded funds (ETFs) for your core holdings in mature markets where active managers find it hard to outperform, and active funds in less well researched areas such as emerging markets or smaller companies, where a good active manager can add value.

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