BlackRock CEO Larry Fink Is Challenging a 73-Year-Old Investing Principle

For over 70 years, professional investors have relied on an investment strategy known as Modern Portfolio Theory (MPT). Developed in the 1950s by Nobel Prize-winning economists Harry Markowitz and Bill Sharpe, MPT popularized the classic 60/40 portfolio—roughly 60 percent stocks and 40 percent bonds—as a way to diversify risk and maximize returns. But Larry Fink, CEO of BlackRock, the world’s largest asset manager, is now questioning that long-standing principle.

As the global financial system evolves...