A client, Mr. Henderson, is 60 years old, retired, and relies on his investment portfolio for income. He expresses a strong desire to preserve capital but also wants to achieve some growth. Which investment strategy would be most suitable for his primary portfolio, emphasizing capital preservation and steady income?

Question: A client, Mr. Henderson, is 60 years old, retired, and relies on his investment portfolio for income. He expresses a strong desire to preserve capital but also wants to achieve some growth. Which investment strategy would be most suitable for his primary portfolio, emphasizing capital preservation and steady income?

Answer options:

• A concentrated portfolio of high-growth technology stocks. ✅ A core-satellite strategy with a large allocation to a diversified income-focused mutual fund as the core.
• A portfolio comprised solely of speculative penny stocks.
• A sector-specific fund focused exclusively on emerging markets.

Correct answer: A core-satellite strategy with a large allocation to a diversified income-focused mutual fund as the core.

Explanation: A core-satellite strategy with a large, income-focused core fund is suitable for Mr. Henderson because it prioritizes capital preservation and steady income, aligning with his retirement goals and risk tolerance. The core provides stability while satellites could offer modest growth opportunities.