Portfolio theory

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Portfolio theory
• Modern portfolio theory (MPT) is a theory on how
risk averse investors can construct portfolios to
maximize expected return based on a given level
of market risk . Harry Markowitz pioneered this
theory in his paper “Portfolio Selection,” which was
published in the Journal of Finance in 1952.

• Modern portfolio theory (MPT) is a theory on how risk
averse investors can construct portfolios to maximize
expected return based on a given level of market risk.

• MPT can also be used to construct a portfolio that
minimizes risk for a given level of expected return.

• Modern portfolio theory is very useful for investors
trying to construct efficient portfolios using ETFs.

• Investors who are more concerned with downside risk
than variance might prefer post modern portfolio theory
(PMPT) to

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