Efficient frontier
The combinations of securities portfolios that maximize expected return for any level of expected risk, or that minimizes expected risk for any level of expected return. Pioneered by Harry Markowitz.
Efficient Frontier
What Does Efficient Frontier Mean?
A line created from the risk-reward graph, composed of optimal portfolios that reflect various portfolio diversification strategies ranging from a most conservative all-cash portfolio to a most aggressive all-equity portfolio.
Investopedia explains Efficient Frontier
The optimal portfolios plotted along the curve have the highest expected return possible for the given amount of risk.
Related Terms:
• Asset Allocation
• Diversification
• Modern Portfolio Theory—MPT
• Risk
• Risk-Return Trade-Off
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