The "Core"/Satellite approach to investing is the division of a pension fund into a passive part ("Core") and an active part (Active satellite managers). "Core"/Satellite is extensively used in offshore markets, particularly in the US and the UK, as investors have found that this approach optimally combines the skills of both index tracking and active fund managers. As a consequence, most local investors have had some exposure to this investment technique. However, the practical implementation of a "Core"/Satellite approach, by a pension fund, is not well understood. For the purposes of this paper, we will collectively refer to Pension Fund Investment Committees, Asset Consultants and Multi-Managers as 'investors'.
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