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Post-modern portfolio theory supports diversification in an investment portfolioto measure investment’s performance

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  • Devinaga Rasiah

Abstract

This study looks at the Post-Modern Portfolio Theory that maintains greater diversification in an investment portfolio by using the alpha and the beta coefficient to measure investment performance. Post-Modern Portfolio Theory appreciates that investment risk should be tied to each investor’s goals and the outcome of this goal did not symbolize economic of the financial risk. Post-Modern Portfolio Theory’s downside measure generated a noticeable distinction between downside and upside volatility. Brian M. Rom & Kathleen W. Ferguson, 1994, indicated that in post-Modern Portfolio Theory, only volatility below the investor’s target return incurred risk, all returns above this target produced ‘ambiguity’, which was nothing more than riskless chance for unexpected returns.

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  • Devinaga Rasiah, 2012. "Post-modern portfolio theory supports diversification in an investment portfolioto measure investment’s performance," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 1(1), pages 1-3.
    • Handle: RePEc:spt:fininv:v:1:y:2012:i:1:f:1_1_3
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    Cited by:

    1. Ayub, Usman & Shah, Syed Zulfiqar Ali & Abbas, Qaisar, 2015. "Robust analysis for downside risk in portfolio management for a volatile stock market," Economic Modelling, Elsevier, vol. 44(C), pages 86-96.

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