Concentration risk refers to the risk we take when we invest too much money as a percentage of our overall portfolio
into a single company or sector. Should something go wrong with the company or sector, a higher percentage of our portfolio underperforms, dragging down the performance of all our investments combined. Concentration risk is the finance term for the idea that you shouldn’t put all your eggs in one basket. A diversified
portfolio will help you avoid concentration risk.
These posts discuss this in more detail:
ETF: Concentration risk in ETFs
ETF: Weighting and single stock risk
Podcast: The diversification dilemma