How Concentration risk works
A portfolio can own many securities yet remain concentrated when they share the same business driver. Overlap across several mutual funds can also create hidden concentration in the same companies.
An example
If one stock is 20% of a portfolio and falls 50%, it reduces the portfolio by roughly 10 percentage points before movement in other holdings.
Why it matters for your family
Review family wealth across accounts, employer stock and property, not one folio at a time. Diversification should reduce dependence on any single outcome.
Questions people ask
- What does Concentration risk mean?
- Concentration risk is the danger that excessive exposure to one issuer, sector, asset or theme causes an outsized portfolio loss.
- Why does Concentration risk matter for a family?
- Review family wealth across accounts, employer stock and property, not one folio at a time. Diversification should reduce dependence on any single outcome.
- Where can I verify information about Concentration risk?
- Start with SEBI Investor, linked on this page, and the current official document for the product or tax year involved.