Modern Portfolio Theory

The Modern Portfolio Theory refers to quantitative asset allocation for maximizing the overall return of a portfolio while holding constant a certain level of risk. In some cases, Modern Portfolio Theory focuses on minimizing the overall risk for a certain target of portfolio returns.

This theory was originally proposed by Nobel winner economist Harry Markowitz in his paper “Portfolio Selection,” which was printed in the Journal of Finance in 1952, and has since evolved as a key portfolio management practice. MPT supports the practice of diversifying a portfolio with an assorted mix of assets or asset classes with some degree of mutual correlation.

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Investing in venture capital funds is inherently risky and illiquid. It involves a high degree of risk and is suitable only for sophisticated and qualified investors.