Investments will vary in performance according to market and economic conditions. A well-diversified portfolio reduces volatility or risk and thus has the potential to deliver more stable returns over time.

But are all portfolios equally capable of maximizing returns while reducing risks? The answer is no.

Portfolios offering the highest level of expected returns for a given level of risk or volatility are clearly the most desirable. These portfolios are commonly referred to as "efficient" and collectively create a curve known as the "efficient frontier".

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