SRP looks at the different building blocks in portfolio construction and how instruments such as structured products fit in a portfolio as they are designed for risk reduction and limiting losses.
The importance of diversification in portfolio construction has been well known for many decades and was first formulated in the development of Modern Portfolio Theory (MPT) by Harry Markowitz in the 1950s. Investors naturally seek assets with high returns and low volatility. It is almost as obvious that spreading the portfolio across relatively uncorrelated assets helps reduce overall volatility without necessarily impacting returns. This article follows on from the first look at the introducti