Ch.10 · Risk Measures and Ratios · easy
What is 'concentration risk' in mutual fund portfolios?
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EXPLANATION
Concentration risk arises when a large portion of the portfolio is invested in a single security, sector, or issuer. If that concentrated holding underperforms, the impact on the overall portfolio is disproportionately large. SEBI's diversification requirements (single stock limits, sector limits) aim to manage concentration risk.
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