Rethinking Modern Portfolio Theory
Jul 1, 2010
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By Meghan P. Elwell, JD, AIFA, and Alexander Pekker, PhD, ASA
An asset allocation is only as good as the capital assumptions that went into it. If you are constructing portfolios based only on standard deviation and average return, you may be inadvertently heightening your clients' risk exposure. Here are some additional risks to consider.