Concentration Risk

Also: Klumpenrisiko

Concentration risk (German: Klumpenrisiko) is the elevated risk of loss when a portfolio is overly concentrated in single positions, sectors, countries, or asset classes. Even broadly diversified portfolios can carry hidden concentration risk — for example, an MSCI World ETF holds roughly 70% U.S. equities. Identifying and reducing concentration risk is a core task of portfolio analysis.