Inefficient portfolio

Inefficient portfolio

Group of assets dominated by at least one other portfolio under the mean variance rule. For example, if A has both lower return and higher volatility than B, we say A is dominated by B.

Inefficient Portfolio

A portfolio that provides too low a return for the risk. That is, an inefficient portfolio has taken on so much risk that the return is not worth the effort. In Markowitz portfolio theory, an inefficient portfolio is graphically represented as any portfolio that does not follow the efficient frontier, or the set of portfolios that provide the highest return at each different level of risk.
References in periodicals archive ?
The company firmly believes that the most economical way of adding new electricity generation capacity is by repowering the aging and inefficient portfolio of existing power plants and by moving to gas power generation and renewable energy.
But due to the scarcity of long-dated gilts, there is often a mismatch between a fund's cash flows and the liabilities, which in turn results in inefficient portfolio risk budgeting.
Energy security is reduced - and prices increased - when countries hold inefficient portfolios that are overexposed to fossil price risks.
Their inefficient portfolios and skewed risk taking is hurting results, and as the numbers show, the cost is very high.