Question: Explain the difference between a MeanVariance optimised portfolio that uses absolute returns (standard deviation) of returns as a risk measure and an MV optimised portfolio

Explain the difference between a MeanVariance optimised portfolio that uses absolute returns

(standard deviation) of returns as a risk measure and an MV optimised portfolio that uses relative risk (Tracking Error) as a risk measure? Explain the difference between the type of investor who would use the former over the latter method of portfolio construction.

Now explain how could optimised MeanVariance portfolio framework for asset allocations that

maximise the probability of achieving investment objectives, rather than achieving a specific investment objective.

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