Analysis of asset selection which maximizes the return and minimizes risk for an investor. An early pioneer in this field was American economist HARRY MARKOWITZ (1927-).
One method of portfolio selection is asset diversification, which spreads risk over a mixture of equities, government bonds, commodities, precious metals, property and currencies.
The final selection of a portfolio will be determined by available information, attitudes towards risk and the income objectives of the investor.
H Markowitz, 'Portfolio Selection', Journal of Finance 7, 1 (March, 1952), 77-97