PT - JOURNAL ARTICLE AU - Noël Amenc AU - Philippe Malaise AU - Lionel Martellini TI - Revisiting Core-Satellite Investing AID - 10.3905/jpm.2004.443322 DP - 2004 Oct 31 TA - The Journal of Portfolio Management PG - 64--75 VI - 31 IP - 1 4099 - https://pm-research.com/content/31/1/64.short 4100 - https://pm-research.com/content/31/1/64.full AB - Tracking error is not necessarily bad. Good tracking error would be outperformance of a portfolio with respect to the benchmark. If they severely restrict the amounts invested in active strategies as a result of tight tracking error constraints, investors foreclose the opportunity for significant outperformance, especially during market downturns. A new methodology based on an optimal dynamic adjustment of the fractions invested in a passive core versus an active satellite portfolio allows investors to gain full access to good tracking error, while keeping bad tracking error below a given threshold. The method is a natural extension of constant-proportion portfolio insurance techniques.