Allocation & Exposure
Concentration
Definition
The degree to which a portfolio's capital or risk is clustered in a small number of positions sectors or geographies.
Concentration is the extent to which portfolio risk or capital depends on a limited set of holdings or common drivers.
Why it matters
High concentration amplifies both gains and losses. It is a deliberate or accidental choice that deserves explicit attention.
What most investors miss
The gap between what the term means and how it is usually applied.
They measure concentration per account not per portfolio. A 10% position in three accounts is a 30% position in the full portfolio.
How to read it
Read concentration as a portfolio-level metric. A position that looks normal inside one account may be oversized across the full picture.
Multi-account lens
How this term reads differently across brokers and accounts.
Concentration risk is one of the most common hidden problems in fragmented portfolios. It only becomes visible at the consolidated level.
Related terms
Terms that connect to concentration.
Hidden Concentration
A concentration risk that is invisible when accounts are reviewed separately but becomes clear at the consolidated portfolio level.
Exposure
What the portfolio is economically exposed to once all positions are looked at together.
Diversification
The practice of spreading capital across assets geographies or sectors to reduce the impact of any single loss.
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