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Optimizing Your Portfolio (w/ Adam Butler) | Expert View | Real Vision™

1,602 views · Published 12 December 2018 · 1:13 · Indexed 12 October 2026

Channel: Real Vision Presents · 2018 · News & Politics

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Adam Butler, CIO of ReSolve Asset Management, returns to Real Vision to explain how portfolio optimization impacts long-term returns. He highlights key aspects of asset allocation and drills down on some of Wall Street’s favorite models and theories. Filmed on October 18, 2018 in New York. 
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Optimizing Your Portfolio (w/ Adam Butler) | Expert View | Real Vision™
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Transcript:
So if CAPM doesn't hold because the relationship between risk and return is tenuous in stocks, then how should we think about the best way to form portfolios? Well, if all stocks should be expected to have the same return, unconditional on risk, then is there any benefit to trying to add higher risk stocks to the portfolio when we don't expect those higher risk stocks to produce commensurately higher returns? 
The reality is that if all stocks are expected to produce the same return, regardless of risk-- the optimal portfolio is that which minimizes total portfolio risk. 
And so there's a well-documented optimization that produces the portfolio with the minimum amount of volatility. It's the minimum variance optimization.

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