Concentration Risk
Concentration risk arises when too much of an investment, portfolio or financial structure depends on a small number of assets, borrowers, issuers, sectors, locations or service providers. This can make losses from a single problem disproportionately large.
Why it matters to you
A tokenized portfolio containing 100 loans may sound diversified. But if most of those loans depend on the same industry, geographic region or borrower group, meaningful concentration risk may still exist. The number of assets alone does not tell you how diversified an investment really is.
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