Bob Brinker's Marketimer

  Monday November 20, 2017

Next Marketimer © Mailing Date: November 6th


© 1997-2017
Privacy Policy

Hosted by:
@ ADPAD INC.




WHAT IS AN EFFICIENT PORTFOLIO?
Learn even more about this topic with the Encyclopedia of Personal Finance™

An efficient (or optimal) portfolio consists of investments in a variety of asset classes selected for minimum correlation in order to lower portfolio volatility.

Examples of asset classes include cash, bonds, and stocks. Each asset class has differing degrees of volatility. The number of assets in a portfolio is not as important as the relationship among those assets. Modern Portfolio Theory looks at portfolios as a whole rather than focusing on the performance of individual securities.

Efficient portfolios have the highest returns for the lowest possible volatility. To select an efficient portfolio, you choose one from the efficient frontier that matches your risk tolerance. You should keep in mind, however, that in general, the lower the volatility, the lower the potential return.

Modern Portfolio Theory assumes that investors dislike risk. They will make investment decisions based on maximizing their returns for an acceptable level of risk.

Now let's look at some of the pluses and minuses of an efficient portfolio.




LEARN EVEN MORE WITH THE ENCYCLOPEDIA OF PERSONAL FINANCE. CLICK HERE!

Powered by


Copyright ©1999-2017, Precision Information, LLC. All Rights Reserved