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In principle, mean variance optimal portfolios that have no restrictions on short sales will have higher expected returns than portfolios that cannot sell short because

In principle, mean variance optimal portfolios that have no restrictions on short sales will have higher expected returns than portfolios that cannot sell short because

the no short sales restriction imposes an opportunity cost

most mutual fund portfolios cannot sell short

the uptick rule constrains portfolios that can hold short positions

selling short adds to the risk of the portfolio -- higher risk, higher expected return