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What is a Concentrated Position?

Wells Fargo Investment Institute – August 2017

An executive is compensated in company stock, or a business owner sells a company and receives proceeds in stock. These are just two of the situations that can result in a concentrated position—an allocation of 10 percent or more to a specific security or asset group. Often concentrated positions can be instrumental in building wealth. Yet they can also have a devastating effect on a portfolio if it underperforms, as experienced by holders of internet and technology stocks in the early 2000s and real estate investors in 2008.  To help educate investors about the various aspects of concentrated positions, our latest Ask the Institute addresses issues such as: 

  • Reducing a portfolio’s concentration risk
  • Tax consequences of overconcentration 
  • Key strategies for managing concentrated position

Download the report (PDF)