# Core and satellite: where theme funds fit

> Learn the core and satellite way to hold a theme fund: size it by what it adds, what it costs and what it could lose, with real VOO and ARKK data.

Data as of Nov 10, 2026. Rebuilt every trading night.

## Core and satellite: where theme funds fit

Data as of Nov 10, 2026. Rebuilt every trading night.

As of Nov 10, 2026 , a 90% VOO and 10% ARKK mix paid 0.10% a year in fees, and ARKK overlapped VOO by 14% .

Allocation and Risk · Lesson 5 of 7 1 2 3 4 5 6 7

Set an amount. See what a 10% ARKK satellite adds as new money, costs in fees, and could lose. Amount (hypothetical) $10,000 On $10,000: New money the satellite adds $860, Fee the satellite pays, a year $8, Loss at ARKK's worst fall $801. Hypothetical amount and a 10% satellite. Overlap 14%, ARKK worst fall 80.1%, fees as of Nov 10, 2026.

### The question

I want most of my money in something broad and cheap, but I also want a piece in a theme I believe in. How big should that piece be, and how do I check what it does?

### The idea

- A core and satellite portfolio has two parts: - The core: most of the money, in broad, low-cost funds that hold the market ( Beginner lesson 1 ).

- Satellites: small slices in focused funds, such as a theme, chosen to hold something the core holds little of.

- The satellite's size is the main decision. Size it by three numbers: what it adds that the core lacks, what it costs, and what it could lose.

### Worked example

Core: VOO, the S&P 500. Satellite: ARKK, ARK's innovation fund from lesson 1 . Mix: 90% VOO, 10% ARKK, on $10,000. (ARKK is an example, not a pick.)

1. What it adds. ARKK and VOO overlap by just 14% by weight ( Beginner lesson 2 ). So 100% − 14% = 86% of ARKK's money is in weight VOO doesn't share. In the mix: 10% × 86% = 8.6% of your money in something new. That is a satellite doing its job: it adds what the core lacks.

But look-through weights ( lesson 4 ) still stack. Tesla is 1.52% of VOO and 10.91% of ARKK:

90% × 1.52% + 10% × 10.91% = 1.37% + 1.09% = 2.46% in Tesla, against 1.52% in VOO alone

(VOO's holdings are dated Sep 30, 2026 ; ARKK's Nov 9, 2026 .)

2. What it costs. VOO charges 0.03% a year, ARKK 0.75% .

- Core, 90% of $10,000: $9,000 × 0.03% = $2.70

- Satellite, 10% of $10,000: $1,000 × 0.75% = $7.50

- Total: $10.20 a year , or 0.10%

Ten percent of the money pays $7.50 ÷ $10.20 = 74% of the fees.

3. What it could lose. ARKK's worst fall on ETFIQ's risk scorecard ( lesson 1 ) was −80.1% , Feb 12, 2021 to Dec 23, 2022 . A hypothetical what-if: if the satellite fell that far while the core stood still, the whole portfolio would lose:

- At 10%: 10% × 80.1% = 8.0%

- At 25%: 25% × 80.1% = 20.0%

The satellite's weight caps what it can do to you. That cap is the reason satellites stay small.

What it did last year. Over the year to Nov 10, 2026 , ARKK returned −6.9% and VOO +11.3% . The mix, held without trading:

90% × 11.3% + 10% × ( −6.9% ) = 10.20% − 0.69% = 9.51% , 1.83 points behind all VOO

One year proves nothing either way. It shows the satellite's result arrives in your total at its weight.

### The common mistake

"It's only 10%, so it can't matter much." It can matter most in the places people don't look: three quarters of the fees here, and an 8 -point loss in a bad stretch, from a tenth of the money.

The opposite mistake: a satellite that overlaps the core heavily. If a theme fund mostly holds the core's largest companies, it adds weight to what you own instead of adding something new. Check its overlap with your core before its story.

### Check your understanding

Pick an answer to see why. Two of three right passes the lesson.

1. A satellite is 15% of a portfolio. Its worst fall was 60%. If it fell that far again and the core stood still, what would the whole portfolio lose? A 6% B 9% C 15% D 60% Answer: B. 9%. 15% × 60% = 9%. Not D: 60% is the satellite's own fall; your loss is scaled by its weight. 2. A core at 80% charges 0.05%; a satellite at 20% charges 0.60%. What is the portfolio's yearly fee? A 0.16% B 0.325% C 0.60% D 0.65% Answer: A. 0.16%. 80% × 0.05% + 20% × 0.60% = 0.04% + 0.12% = 0.16%. Not B: a plain average of the two fees ignores how much money is in each. 3. A theme fund overlaps your core by 90%. As a satellite at 10%, how much new exposure does it add? A About 9% of your money B None at all C About 1% of your money D 10% of your money Answer: C. About 1% of your money. 10% × (100% − 90%) = 1%. Not D: 90% of its weight is already in the core.

### Takeaways

- Before adding a satellite, check its overlap with your core: new exposure is weight × (100% − overlap).

- Work out the satellite's share of your total fees, in dollars.

- Size a satellite by its worst fall times its weight, and ask whether you could live with that loss.

### Do it on ETFIQ

X-ray your own core with a theme fund added Your fund

### Where to next

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Source: ETFIQ, independent ETF data. Recomputed nightly from public filings and prices.
Cite: ETFIQ, Core and satellite: where theme funds fit, data as of Nov 10, 2026. https://etfiq.com/academy/allocation-and-risk/core-and-satellite/
Licence: https://etfiq.com/license/ Data ETFIQ computes is free to use with attribution: ETFIQ (etfiq.com). Issuer data stays under its owner's terms.
HTML: https://etfiq.com/academy/allocation-and-risk/core-and-satellite/