Applying Concepts of the Efficient Frontier 

"Efficient Frontier" is the parlance used by finance professionals to describe the graphed curve of sweet spots between risk and return for any particular mixture of assets that are regularly marked-to-market.  The concept is powerful although it does have limitations.  The variables to the equation are either historical returns and volatilities, which of course may or may not be repeated, or guesses as to future values of same.  We're happy to discuss the topic in more detail, but essentially if one starts with a portfolio of 100% riskless short-term Treasuries, then proceeds to feed in riskier investments one unit at a time, the expected return will go up faster than the expected portfolio volatility, which is an advantage.  The less correlated are the assets, the more the potential return will rise faster than the expected volatility... to a certain tipping point, after which the opposite happens to the point where a portfolio of one volatile risky investment will obviously match that risky asset's characteristics exactly.

The value behind a portfolio managed to the efficient frontier is equal to the degree an investor is concerned with term volatility.   EF generally has the most value to an institutional investor, but a thorough understanding of EF forces an advisor to have a deeper understanding of the way asset classes correlate, beyond just the superficial statistics.