Example Product Portfolio Gap Analysis Template - Free Download | Page 9
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Portfolio Gap Analysis
Portfolio Diversification
Potential Gap
Equity Concentration Risk
Equity holdings diversification is a means to help eliminate unsystematic or company-specific risk
1
.
During periods of high market volatility, the returns for individual stocks may vary substantially.
Broad diversification across a large number of individual stocks is intended to minimize the
possibility that any single holding will guide the returns of the portfolio.
For effective diversification, we recommend that the top 10 stocks should not represent more than
10% of your portfolio. Too much concentration in your portfolio may subject your portfolio to
unnecessary risks.
It is also important to review the amount of cash held within your equity mutual funds and managed
investments to ensure that they are efficiently capturing the market rates of returns offered by each
asset class. Cash Efficiency of less than 2% will ensure that your investments are being efficiently
managed to reduce the diluting effects of cash in an equity fund or managed account.
Current
Portfolio
Recommended
Portfolio
Gap
Total Stocks 647 1 646
Top 10 Stocks 10.08% 100.00% -89.92%
Cash Efficiency 4.50 0.00 4.50
The chart below compares the holding concentration across the various equity investments in your
current and recommended portfolios.
Current Portfolio Top Ten Holdings
Amazon.com Inc 1.91%
Philip Morris International In 1.47%
Amgen Inc 1.11%
Verizon Communications Inc 0.92%
Alphabet Inc C 0.87%
Novartis AG 0.82%
Broadcom Ltd 0.79%
Altria Group Inc 0.77%
Alexion Pharmaceuticals Inc 0.75%
Coca-Cola Co 0.68%
10.08%
110%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Recommended Portfolio Top Ten Holdings
100.00%
100.00% Apple Inc
1
“Unsystematic Risk Definition.” Investopedia.com - Your Source For Investing Education. Web. 04 Nov. 2011.
http://www.investopedia.com/terms/u/unsystematicrisk.asp.
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source: advisor.myadvisorcenter.com
