Asset Allocation & Risk

What is the efficient frontier?

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The dominance principle holds that a portfolio with a higher expected return for the same risk, or lower risk for the same expected return, is better than other portfolios.

Under this principle, the line connecting the best portfolios, none of which is superior to another, is the efficient frontier. Investors are described as choosing the combination on this line that matches their risk preference.

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This answer is general financial information as of 14.10.2026, not investment advice. Rules and tax rates change, so please also check the latest guidance from the source institution.