There are 2 types of managed funds. The first is principal guaranteed with a fixed 5% annual return. The second's returns can fluctuate between 20% to -20% annually. What percentage of funds, say 100k, to allocate to these 2 different investments optimally? I am interested in a general math formula to combine the 2 types of funds based on maximum downside , maxDD I choose. For e.g, if I invest 20% in the second and 80% in the first. The worst total fund maxDD is 0.2* -20 +0.8*5=0% (a) 10% fund B, 90% fund A Best scenario = 0.1*20+0.9*5=6.5k Worst = 0.1*(-20)+0.9*5=2.5k (b) 20% fund B, 80% fund A Best = 8k Worst = 0k (c) 40% fund B, 60% fund A Best = 11k Worst = -5k (d) All in fund A... Fixed return=5k Which one would you choose and why?