PT  - JOURNAL ARTICLE
AU  - Franklin J. Parker
TI  - Portfolio Selection in a Goal-Based Setting
AID  - 10.3905/jwm.2016.19.2.041
DP  - 2016 Jul 31
TA  - The Journal of Wealth Management
PG  - 41--46
VI  - 19
IP  - 2
4099  - https://pm-research.com/content/19/2/41.short
4100  - https://pm-research.com/content/19/2/41.full
AB  - Using different portfolio ratios, we illustrate the deficiencies of using only modern portfolio theory (MPT) metrics and assumptions when selecting portfolios in a goal-based setting. Through the lenses of the ratios, we show how MPT can choose the “wrong,” albeit efficient, portfolio to accomplish a goal. These facts illustrate the need for goal-based practitioners to factor in other variables, such as time to a goal and maximum loss thresholds, when managing a portfolio to a goal-oriented mandate.TOPICS: Portfolio theory, wealth management, in wealth management