Modern Portfolio Theory is not only out of date, it’s harmful for pension portfolios. So said Thomas Schneeweis, professor of finance and director of the Center for International Securities and Derivatives Markets, Isenberg School ofManagement, University of Massachusetts-Amherst. He was speaking at the 2011 Investment Innovation Conference in Bermuda last week. In this interview, he discusses how Modern Portfolio Theory is based on the wrong assets and correlations that hearken back to the 1950s. While some pension funds understand this, he notes, many still cling to the tenets of the theory simply because teaching textbooks are filled with assumptions based on it. Until something changes, it’s going to remain the dominant paradigm even though it no longer applies to a changed marketplace. Click the image to watch the entire interview.