The Efficient Frontier is a term used in modern finance and economics. It refers to the set of optimal portfolios that offer the highest expected return for a defined level of risk or the lowest risk for a given level of expected return. The efficient frontier is often depicted as a curved line on graphs, with the highest expected returns found at the outermost points and the lowest risks found at the innermost points.The existence of an efficient frontier was first proven by Harry Markowitz in his 1952 paper "Portfolio Selection." In it, he showed that it was possible to construct an optimal portfolio by combining different assets in such a way as to minimize overall risk. This work won him the Nobel Prize in Economics in 1990.Since its introduction, much research has been done on how best to exploit and navigate around the efficient frontier. One key finding is that adding more risky assets to your portfolio can increase your expected return without significantly increasing your risk levels provided those assets are chosen correctly .This has led many investors to seek out high-yield stocks and other investments outside traditional asset classes in order to boost their overall returns.
