My Core-Satellite ETF portfolio

[sandeep_cs]

Is it better to build an ETF portfolio with Core + Thematic ETFs or just focus on Nifty50/Next50 ETFs?
I’m in the process of building a long-term ETF portfolio and wanted to get opinions from the community.

Many experts suggest a “Core-Satellite” approach, where:

Core = Nifty50, Next50, and Liquid ETFs (70-80% allocation)

Satellite = Thematic/Factor ETFs (like PSU, Infra, FMCG, Low Volatility, Momentum, etc.)

But some argue that over the long run, sticking to Nifty50 and NiftyNext50 is good enough, and thematic plays only create extra churn and tracking error without adding much alpha.

My Questions:

Is it really worth complicating things with sector/thematic ETFs?

Has anyone here seen consistent outperformance from themes like PSU Banks, Infra, or Momentum ETFs in their portfolio?

How do you manage rebalancing between core and thematic buckets when market cycles change?

What is your allocation logic? (Core vs Thematic % split)

Would love to hear actual experiences and how people are handling this in real portfolios.

• I noticed many of you have hands-on experience with thematic ETFs. Curious to know how you personally manage the core-satellite split?
• Do you think thematic ETFs genuinely add long-term value, or is it more of a tactical play? Would love to get different viewpoints.

@VishalJain , @vasanthkamath @Meher_Smaran — I’ve seen your posts on ETF strategies. Would love to hear your take on this core vs thematic allocation dilemma.

I’ll compile a summary of different strategies people are using based on this discussion. It might help many of us build a more practical approach - refer 101 Beginner Questions — Lessons I Learned from TradingQnA - #36 by sandeep_cs

[VishalJain]

Hey Sandeep. You have asked many pertinent questions. But there is no hard and fast rule to define a core-satellite mix as it would be different for different people based on individual objectives.

Your core portfolio should definitely include other assets such as Gold & Debt i.e. debt products maybe split i.e. <1year, 1-5 years, 5-10 years based on your liquidity needs. Liquid ETFs are 1 day maturity and so considered as cash. Gold is a good addition as its correlation with equity is low. Nifty 50 & Nifty Next 50 are good but with the Indian economy diversifying rapidly, may make sense to diversify more over a period. Broad-based equity allocation, Gold & Debt with duration should make the core.

Core-Satellite is a disciplined way to split a portfolio but have a satellite portion only if you are convinced about a specific theme, factor or alternative asset class. If not then stick to building a good core portfolio. You could also look at adding the satellite portion at a later time once your core portfolio is doing what you had intended.

I usually try and build a simple portfolio i.e. have few securities, easier to understand & manage. Think atleast 3 years horizon, so prevents unnecessary rebalancing & cost.

Best would be to consult with a financial advisor who can help further with the right split based on your financial needs & goals.

Hope this helps!

[sandeep_cs]

Thank you, @VishalJain , for the thoughtful and well-articulated reply.

I really appreciate how you emphasized the importance of building a solid Core portfolio with broader asset diversification, including Debt and Gold. That perspective often gets overlooked when people focus too narrowly on equity ETFs. Your approach of keeping portfolios simple, avoiding unnecessary churn, and thinking in multi-year horizons truly reflects a seasoned long-term mindset. Very refreshing!

I had started my ETF journey even before Zerodha’s Multi-Asset FoF was launched, but I really liked that product approach too. It aligns well with the Core-Satellite philosophy by providing a simple framework for multi-asset exposure without overcomplicating things. For many investors like me (please remember this is not a recommendation of any kind, kindly do your own research before investing) , such FoFs are a great entry point into disciplined asset allocation. refer Zerodha Multi Asset Passive FoF | Invest in NFO starting with just Rs.100

That said, I’m still exploring how thematic and factor ETFs (like PSU Banks, Infra, Momentum, Low Volatility) can be tactically integrated into a satellite bucket. Have you—or anyone here—experienced consistent outperformance from these themes over a full market cycle?

Also curious to know how you personally manage rebalancing between Core and Satellite—do you prefer a rules-based rebalancing (say annual or % deviation) or do you tactically adjust based on market conditions?

My Portfolio Allocation - Core & Satellite Strategy
I’m sharing my current portfolio allocation based on a Core-Satellite Strategy. Below are the detailed allocations, tables, and pie charts for a better understanding.
Core Portfolio

Satellite Portfolio

---

Pie Chart 1: Core vs Satellite Allocation

Pie Chart 2: Core Portfolio Breakdown

Pie Chart 3: Satellite Portfolio Breakdown

Portfolio Detailing:

• Core Portfolio (91.1%): This forms the stable base of my portfolio. Majority is parked in Liquid 1D (73%) for liquidity and tactical deployment. Equity exposure is conservative with Nifty 50 (5%) and Next 50 (4%). Gold (9%) acts as a hedge, while a small G-Sec (0.1%) portion ensures debt allocation.
• Satellite Portfolio (8.6%): This segment is for growth opportunities. Silver (2.9%) and Midcap (2.9%) are my aggressive bets. Smallcap (2.3%) adds to the high-risk/high-reward bucket. Minimal allocations are kept in REIT (0.2%) and US (0.3%) for diversification.

This structure gives me a balance between stability, liquidity, and potential upside from selective satellite bets.

Would love to hear your thoughts or suggestions on this structure!

[AmSingh]

Hi I have a question in relation to the ETF and individual stock price dynamics. Since many stocks are held by institutional investors, both domestic and international, like blackrock through ETFs, eg. Emerging market ETFs… How much will these ETFs affect the component stocks share price? I understand that these ETF may be tracking the indexes, which are calculated through so many different methods. So I would love to know in general, how sensitive are individual stock prices to the ETFs or Indexes. Thank you!

[stoxiq]

@AmSingh

Hi I have a question in relation to the ETF and individual stock price dynamics. Since many stocks are held by institutional investors, both domestic and international, like blackrock through ETFs, eg. Emerging market ETFs… How much will these ETFs affect the component stocks share price? I understand that these ETF may be tracking the indexes, which are calculated through so many different methods. So I would love to know in general, how sensitive are individual stock prices to the ETFs or Indexes. Thank you!

When people buy or sell an ETF, the fund usually has to buy or sell the stocks inside it. This can move those stock prices a bit, especially if they’re smaller or not traded much. Big stocks dont get affected much, except during index reshuffles.

[sandeep_cs]

Assets in terms of volatility.

Refer : How to Build a Core Satellite Investing Portfolio?

New Zerodha Multi Asset Passive FoF — looks like a stable Core asset idea. (Not a recommendation—please do your own research before investing.)
Refer : Zerodha Multi Asset Passive FoF | Invest in NFO starting with just Rs.100