Allocation & Exposure
Sector Allocation
Definition
The distribution of the portfolio's capital across industry sectors such as technology healthcare energy or financials.
Why it matters
Sector allocation drives a large portion of portfolio volatility. An unintended sector tilt can dominate returns without being visible.
What most investors miss
The gap between what the term means and how it is usually applied.
They check sector allocation inside one broker's ETF breakdown but miss the combined sector picture across all accounts.
How to read it
Read sector allocation at the consolidated level. A sector that looks minor in one account may be dominant across the full portfolio.
Multi-account lens
How this term reads differently across brokers and accounts.
ETF overlap across accounts can create unintended sector concentration that is invisible at the account level but significant at the portfolio level.
Concrete example
What this looks like with real numbers.
Scenario
A portfolio showing US 44%, EU 32%, EM 24% by geography looks balanced. Mapping the same positions by sector reveals 69% technology exposure. Three ETFs with 'global' in their name all overweight the same sector — no single broker surfaces this overlap.
What it reveals
Sector allocation reads what the portfolio is really betting on. Geography and sector are orthogonal — a globally diversified portfolio can still be a sector-concentrated one.
Related terms
Terms that connect to sector allocation.
Geographic Allocation
The distribution of the portfolio's capital across countries or regions.
Allocation
How the portfolio's capital is distributed across asset classes geographies sectors or individual positions.
Hidden Concentration
A concentration risk that is invisible when accounts are reviewed separately but becomes clear at the consolidated portfolio level.
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