Market Exposure

Market Exposure

The amount of funds invested in a particular type of security and/or market sector or industry and usually expressed as a percentage of total portfolio holdings. Thus, it is the amount an investor has at risk or the amount he/she can lose. Also known as "exposure".

Notes:

The exposure of a portfolio to particular securities/markets/sectors must be considered when determining asset allocation since it can greatly increase returns or, if properly done, minimizes losses. For example, a portfolio with both stocks and bonds holdings will typically have less risk than a portfolio with exposure only to stocks.

See also: Asset Allocation, Bond, Cash and Equivalents, Mutual Fund, Risk, Systematic Risk