An overreliance on modern portfolio theory could be leading Aussie investors to failure, a portfolio manager has warned, calling for more awareness of, and appreciation for, the underlying companies.

According to Steven Bleiberg, portfolio manager at New York-based Epoch Investment Partners, modern portfolio theory (MPT) has been a good thing for people’s understanding of investing, but can also hinder those seeking active management.

“It is our contention that over the last 50 years, some investors have become so enamoured of the theory that they have lost sight of the real world underlying the theory,” he said.

To read the article published by Nestegg, click here.