RT Journal Article
SR Electronic
T1 Portfolio Selection in a Goal-Based Setting
JF The Journal of Wealth Management
FD Institutional Investor Journals
SP 41
OP 46
DO 10.3905/jwm.2016.19.2.041
VO 19
IS 2
A1 Franklin J. Parker
YR 2016
UL https://pm-research.com/content/19/2/41.abstract
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