The efficient frontier is a core concept from Modern Portfolio Theory (MPT), introduced by Harry Markowitz in 1952, that represents the set of optimal investment portfolios offering the maximum expected return for a given level of risk (standard deviation), or equivalently, the minimum risk for a given expected return. When plotted on a graph with expected return on the Y-axis and risk (standard deviation) on the X-axis, the efficient frontier appears as a curved boundary — portfolios lying on this curve are 'efficient' (no other portfolio offers higher return at the same risk), while portfolios below the frontier are sub-optimal. Portfolios above the frontier are theoretically unachievable. The efficient frontier shifts based on the assets included, their correlations, and return assumptions. For portfolio managers and investors on Ventura Securities, constructing portfolios on or near the efficient frontier — through diversification across asset classes, sectors, and geographies with low correlations — is the quantitative foundation for maximising risk-adjusted returns and building well-structured multi-asset investment strategies.
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