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What is meant by the two fund theorem and why it is important?

What is meant by the two fund theorem and why it is important?

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The "two fund theorem" is the establishment of two efficient Funds or Portfolios with the purpose that any efficient fund or portfolio can copied or duplicated (in terms of mean and any variance overall combined) to the other fund or portfolio so that the profit or benefits could be doubled for the investors.

The importance of creating such "Theorem" is that the investors invest in the portfolio in combination in both the portfolios or funds to have gain. The both the funds in combination provides the complete portfolio services to the investors.

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