> For the complete documentation index, see [llms.txt](https://docs.dtf.fun/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.dtf.fun/explainer-modern-portfolio-theory-mpt.md).

# Explainer: Modern Portfolio Theory (MPT)

Modern Portfolio Theory (MPT) is the backbone of DeFAI Agent Franklin's portfolio optimization approach. 

Developed by economist Harry Markowitz in 1952, MPT revolutionized financial investing by introducing mathematical methods for risk-return optimization. 

This explainer will provide historical background, fundamental concepts, and its application in Franklin AI.

{% content-ref url="/pages/f4nrt5RGCICb7itlD8bl" %}
[Historical Background](/explainer-modern-portfolio-theory-mpt/historical-background.md)
{% endcontent-ref %}

{% content-ref url="/pages/l9aswPhDOxqKLm40mjnr" %}
[Key Concepts](/explainer-modern-portfolio-theory-mpt/key-concepts.md)
{% endcontent-ref %}

{% content-ref url="/pages/12oBeVQSz3pHgfBM9AMQ" %}
[Application in Franklin AI](/explainer-modern-portfolio-theory-mpt/application-in-franklin-ai.md)
{% endcontent-ref %}

{% content-ref url="/pages/aWLs0G19es3m29b0267V" %}
[Why MPT Matters](/explainer-modern-portfolio-theory-mpt/why-mpt-matters.md)
{% endcontent-ref %}


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