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Demystifying Modern Portfolio Theory for Everyday Investors

Demystifying Modern Portfolio Theory for Everyday Investors

Demystifying Modern Portfolio Theory for Everyday Investors

Jan 18, 2024

Jan 18, 2024

Jan 18, 2024

Purple Flower
Purple Flower

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

  1. Balancing Risk
    MPT encourages spreading investments across diverse sectors—tech, healthcare, commodities, and more.

  2. 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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FAQs

Frequently Asked Questions

Frequently Asked Questions

Frequently Asked Questions

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How can this impact my business?
How long does an this take to implement?
Will we need to make changes in our teams?

Still have a question?

Get in touch with our team.

How can this impact my business?
How long does an this take to implement?
Will we need to make changes in our teams?

Still have a question?

Get in touch with our team.

Surmount builds investment management software with the objective to provide investors with a more convenient & personalized experience

Quantitative Finance LLC ("QFL") is a wholly-owned subsidiary of Surmount Investments Inc, is an investment adviser registered with the Securities and Exchange Commission (“SEC”). By using this website, you accept our Terms of Use and Privacy Policy. Surmount’s investment advisory services are available only to residents of the United States in jurisdictions where Surmount is registered.
Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities. Past performance is no guarantee of future results. Any historical returns, expected returns [or probability projections] may not reflect future performance. Account holdings are for illustrative purposes only and are not investment recommendations.
The content on this website is for informational purposes only and does not constitute a comprehensive description of Surmount’s investment advisory services. Refer to Surmount's Program Brochure for more information. Certain investments are not suitable for all investors. Before investing, consider your investment objectives and Surmount’s fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Brokerage services are provided to Surmount Clients by Alpaca Securities LLC, an SEC registered broker-dealer and member FINRA/SIPC. For more information, see our disclosures.

† Surmount is an SEC-registered investment adviser. This does not imply any level of skill of training. Investing in securities always involves the risk of loss. Past performance does not guarantee future results, and opinions presented herein should not be viewed as an indicator of future performance.

* These are not, nor intended to be, a testimonial or endorsement of Surmount's services.

© 2025 Surmount Technologies, LLC. All rights reserved.

Surmount builds investment management software with the objective to provide investors with a more convenient & personalized experience

Quantitative Finance LLC ("QFL") is a wholly-owned subsidiary of Surmount Investments Inc, is an investment adviser registered with the Securities and Exchange Commission (“SEC”). By using this website, you accept our Terms of Use and Privacy Policy. Surmount’s investment advisory services are available only to residents of the United States in jurisdictions where Surmount is registered.
Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities. Past performance is no guarantee of future results. Any historical returns, expected returns [or probability projections] may not reflect future performance. Account holdings are for illustrative purposes only and are not investment recommendations.
The content on this website is for informational purposes only and does not constitute a comprehensive description of Surmount’s investment advisory services. Refer to Surmount's Program Brochure for more information. Certain investments are not suitable for all investors. Before investing, consider your investment objectives and Surmount’s fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Brokerage services are provided to Surmount Clients by Alpaca Securities LLC, an SEC registered broker-dealer and member FINRA/SIPC. For more information, see our disclosures.

† Surmount is an SEC-registered investment adviser. This does not imply any level of skill of training. Investing in securities always involves the risk of loss. Past performance does not guarantee future results, and opinions presented herein should not be viewed as an indicator of future performance.

* These are not, nor intended to be, a testimonial or endorsement of Surmount's services.

© 2025 Surmount Technologies, LLC. All rights reserved.

Surmount builds investment management software with the objective to provide investors with a more convenient & personalized experience

Quantitative Finance LLC ("QFL") is a wholly-owned subsidiary of Surmount Investments Inc, is an investment adviser registered with the Securities and Exchange Commission (“SEC”). By using this website, you accept our Terms of Use and Privacy Policy. Surmount’s investment advisory services are available only to residents of the United States in jurisdictions where Surmount is registered.
Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities. Past performance is no guarantee of future results. Any historical returns, expected returns [or probability projections] may not reflect future performance. Account holdings are for illustrative purposes only and are not investment recommendations.
The content on this website is for informational purposes only and does not constitute a comprehensive description of Surmount’s investment advisory services. Refer to Surmount's Program Brochure for more information. Certain investments are not suitable for all investors. Before investing, consider your investment objectives and Surmount’s fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Brokerage services are provided to Surmount Clients by Alpaca Securities LLC, an SEC registered broker-dealer and member FINRA/SIPC. For more information, see our disclosures.

† Surmount is an SEC-registered investment adviser. This does not imply any level of skill of training. Investing in securities always involves the risk of loss. Past performance does not guarantee future results, and opinions presented herein should not be viewed as an indicator of future performance.

* These are not, nor intended to be, a testimonial or endorsement of Surmount's services.

© 2025 Surmount Technologies, LLC. All rights reserved.