Allocation & Exposure
Geographic Allocation
Definition
The distribution of the portfolio's capital across countries or regions.
Why it matters
Geography affects currency risk regulatory exposure and economic cycle sensitivity in ways that sector alone does not capture.
What most investors miss
The gap between what the term means and how it is usually applied.
They use fund names as a proxy for geographic exposure. A fund labeled "global" may be 70% US equities.
How to read it
Read geographic allocation from the underlying holdings of each fund not from fund labels alone.
Multi-account lens
How this term reads differently across brokers and accounts.
Geographic concentration can compound across accounts when multiple brokers hold funds with similar regional biases.
Concrete example
What this looks like with real numbers.
Scenario
An investor holds 9 positions across 3 brokers and estimates 38% Europe exposure from fund names. After mapping ETF holdings through to underlying countries, Europe is actually 22% and the US is 63%. Three 'global' ETFs each had 55–70% US weight.
What it reveals
Geographic allocation based on fund labels is approximate at best. Real exposure requires looking through every fund to the underlying security level, then aggregating across all accounts.
Related terms
Terms that connect to geographic allocation.
Sector Allocation
The distribution of the portfolio's capital across industry sectors such as technology healthcare energy or financials.
Currency Exposure
The portion of the portfolio whose value changes when exchange rates move even if no currency conversion has taken place.
Allocation
How the portfolio's capital is distributed across asset classes geographies sectors or individual positions.
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