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Introduction
Modern Portfolio Theory (MPT), pioneered by Harry Markowitz in 1952, revolutionized the way investors approach risk and return. By examining how different assets correlate, MPT helps construct portfolios that maximize return for a given level of risk.
Core Principles
Expected Return: Anticipated average return based on historical data or models.
Variance and Correlation: Combining uncorrelated assets can reduce overall volatility.
Efficient Frontier: The ideal mix of assets that offers the highest return at each risk level.
Practical Applications for Individuals
Balancing Risk
MPT encourages spreading investments across diverse sectors—tech, healthcare, commodities, and more.Systematic Rebalancing
Automated tools can periodically rebalance assets to maintain your ideal risk posture.
Evidence of Success
Research from the CFA Institute confirms that MPT-driven approaches often outperform portfolios assembled without correlation analysis1.
How Surmount Wealth Does It Better
Surmount Wealth’s platform applies MPT in a user-friendly manner, displaying real-time risk assessments and recommended adjustments to keep you on your personal “efficient frontier” without the complexity of spreadsheets or advanced math.
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