The Flaw in MPT: Average Returns

Dec 8, 2011 / By Amy E. Buttell
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Basing a portfolio on average returns fails to take into account that return distributions have changed. Gone are the nicely rounded bell curves of MPT that shaped portfolios 20 years ago. Instead, advisors should focus on median returns, risk, and volatility to build portfolios that look more like barbells than pie charts.

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