iSectors®, LLC Post-MPT Allocation: Improving the Application of Modern Portfolio Theory

By Chief Executive Officer MBA, CFP®, Vernon C. Sumnicht on June 7, 2016

The research on Modern Portfolio Theory (MPT) was published more than 55 years ago.  Nonetheless, it would be difficult to overstate the influence of MPT’s core principles on the manner in which investments are managed today.

The first principles of the MPT include:

• Investors are risk-adverse. The only acceptable risk is that which is adequately compensated by potential portfolio returns.

• Markets are efficient. For the most part, stocks are fairly priced because so many people research stocks all factors are already reflected in the price.

• Every level of risk has an optimal allocation of asset classes that will maximize returns. Conversely, for every level of return there is an optimal allocation of asset classes that can be determined to minimize risk.

The research published since the 1950s, which has been termed Post-Modern Portfolio Theory, including research in Behavioral Finance, has pointed the way to applications and technologies that can improve investment results and catapult the principles of MPT to a new level of effectiveness.

In an effort to improve the risk-adjusted returns for their investors, Vern Sumnicht and his team at iSectors®, LLC, spent years working to apply the lessons learned from Post-MPT. Mr. Sumnicht continues to update his white paper on Post-MPT.  To obtain a copy of this whitepaper, click here to download.

The Fund is distributed by ETF Distributors LLC, an affiliate of Virtus ETF Advisers LLC.

Please consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. The prospectus contains this and other information about the Fund. Contact Virtus at 1-888-383-0553 or visit www.virtus.com for a copy of the Fund’s prospectus. Read the prospectus carefully before you invest or send money.