How the calculator works
Each amount is divided by the total to get its weight, so you can enter rupee values or percentages. The calculator then measures how evenly the money is spread:
- Largest holding: the share of the single biggest position.
- Top 3 and top 5: how much sits in the few biggest positions.
- HHI (Herfindahl-Hirschman Index): the sum of each weight squared, in percent. It is 10,000 for a single holding and falls as money spreads out.
- Effective number of holdings: 1 divided by the sum of the squared weights (as fractions). It answers the question "this portfolio behaves like how many equal-sized holdings?"
The level is set by the more concentrated of two readings: the largest holding and the effective number of holdings.
What is HHI?
The Herfindahl-Hirschman Index comes from competition economics, where it measures how concentrated an industry is. Applied to a portfolio, it squares each holding's percentage weight and adds them up. Squaring makes big positions count for much more than small ones.
Four equal holdings of 25% give an HHI of 2,500. Twenty equal holdings of 5% give 500. One holding of 100% gives 10,000.
What is the effective number of holdings?
HHI is hard to picture, so the calculator also converts it into the effective number of holdings: how many equal-sized positions would give the same concentration. Ten holdings where one is 55% and the other nine are 5% each behave like about 3.1 equal holdings, not ten.
How the levels are set
The bands below are a starting point, not a rule. They differ for stocks and funds because each fund already holds many companies.
| Level | Stocks: largest holding | Stocks: effective holdings | Funds: largest fund | Funds: effective funds |
|---|---|---|---|---|
| Low | Up to 10% | 15 or more | Up to 40% | 3 or more |
| Moderate | Up to 20% | 8 or more | Up to 60% | 2 or more |
| High | Up to 35% | 4 or more | Up to 80% | 1.25 or more |
| Very high | Above 35% | Below 4 | Above 80% | Below 1.25 |
For context, SEBI generally limits an equity mutual fund scheme's investment in any one company's shares to 10% of its assets, with exemptions for index and sector funds. That is why 10% is the mark for low concentration in a stock portfolio.
What suits you depends on your goals, time horizon, risk tolerance and the rest of your wealth. A deliberately concentrated portfolio can be reasonable for an investor who understands the risk. The point is to know that it is concentrated.
Why the number of holdings can mislead
- Twenty stocks with one at 40% are more concentrated than ten equal stocks.
- Five equity funds can own the same top companies several times over.
- Several holdings in one sector can move together like one large position.
Stock concentration vs sector concentration
Choose a sector for each stock to see the sector split. Companies in the same sector share drivers such as interest rates, commodity prices or regulation, so a portfolio spread across many banks is still a bet on banking. The calculator calls out any sector above 40% of a stock portfolio.
Financial services is the largest sector in the Nifty 50, so portfolios built from index heavyweights often lean towards it without the investor intending it.
Mutual funds: look-through concentration
When you enter mutual funds, the calculator measures how much depends on each fund. It cannot see inside the funds. Large-cap, flexi-cap and index funds often hold the same biggest companies, so two funds from one category may add less diversification than they appear to. Our mutual fund portfolio review guide treats 50% or more overlap in top holdings as a sign that two funds may be doing similar work.
To measure concentration at the company level, combine what each fund holds. Fund factsheets list their top holdings, or a portfolio analysis tool can map them from your actual investments.
What to do with the result
A high reading is a prompt to check, not an instruction to sell. Ask whether the concentration is intended, whether one company or sector could hurt your goals if it fell sharply, and whether new money could go elsewhere instead. Selling can trigger capital gains tax and exit loads. For a structured approach, see the portfolio rebalancing guide and how to build a mutual fund portfolio.
Frequently asked questions
What is portfolio concentration?
Portfolio concentration is how much of your money depends on a few holdings, sectors or funds. The more concentrated a portfolio is, the more a single company or theme can move its value.
How is HHI calculated for a portfolio?
Square each holding's weight in percent and add the results. A single holding scores 10,000 and ten equal holdings score 1,000. The lower the number, the more evenly the money is spread.
What is a good effective number of holdings?
There is no single right number. As a rough guide, a stock portfolio that behaves like 15 or more equal holdings is broadly spread, and one that behaves like fewer than 4 is highly concentrated. For mutual funds, which already hold many companies, 3 or more effective funds is a broad spread.
Does holding more mutual funds mean better diversification?
Not necessarily. Funds in the same category often own the same large companies, so adding funds can repeat exposure rather than spread it. What matters is what the funds hold and how much they overlap.
Should I enter amounts or percentages?
Either. The calculator converts what you enter into weights, so ₹3,00,000 and 30 give the same result as long as the other entries use the same unit.
Can the calculator see inside my mutual funds?
No. With mutual funds it measures how much depends on each fund. To see company-level concentration across your funds you need their holdings; Genvest's portfolio analysis maps them from your actual investments.
Are the holdings I enter stored?
No. The calculation runs in your browser, and the holdings you enter are not saved or sent to Genvest.
Related guides
- How to Build a Mutual Fund Portfolio in India
- Mutual Fund Portfolio Review
- Portfolio Rebalancing Guide for Indian Investors
- Asset Allocation for Indian DIY Investors
- AI Portfolio Analysis: Fund Quality, Fee Leaks and Outlook
More Genvest calculators
This calculator is an educational illustration based on the figures you enter. It is not a recommendation or personalised investment advice. Investments in securities market are subject to market risks. Read all related documents carefully before investing. Registration granted by SEBI, enlistment with IAASB and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.