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What is a Core Holding?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 15 November 2016
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    Conjecture Corporation
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A core holding is some type of investment that is purchased with the express intention of remaining a part of the investment portfolio for an extremely long time, if not permanently. The nature of this long-term holding is generally considered to be both consistently profitable and substantial enough to form the foundation or core for the portfolio. A core holding may also form the basis for investment activity if a given fund as well as provide the foundation for a portfolio.

In many aspects, a core holding is the anchor that provides a sense of stability and direction to funds and portfolios. The type of investment, such as shares in a highly regarded company, is usually a clue as to the types of investing opportunities the investor chooses to approach. Often, other and more transient investments will be possible because of the stability of the core holding, as the holding represents at least one investment that will consistently perform, even if other investments falter.

There is some disagreement on exactly how long a core holding must remain part of the portfolio in order to truly be considered a foundational or core investment. Some analysts indicate that if the particular security or other holding has been in the possession of the investor for at least ten years, the holding can be considered to be a core holding. Others indicate that core holdings must be held for twenty or more years before attaining that status.

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Still others believe it is not the current duration that the holding has been in the portfolio, but the intent of the investor that is the determining factor. In other words, if the investor purchases ten thousand shares of a well established company with the intent of hanging on to the shares for the new couple of decades, the investment can rightly be considered a core holding. The status would only change if circumstances made it absolutely necessary for the investor to part with the shares.

Most investors will have at least one core holding within the investment portfolio. Often, additional shares are added to this holding when and as possible. This incremental accumulation of shares over time can eventually lead to a great deal of financial stability, assuming the core holding selected performs well over the long term.

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