Posted in Finance, Accounting and Economics Terms, Total Reads: 133
Definition: Top Holdings
Top Holdings are financial instruments having huge weightage in the portfolio of an investor or company or any other financial institution. They are among the top in the bunch of instruments held by the investor in terms of volume and weightage. This financial instrument can be stocks, bonds, securities, mutual funds, contracts etc.
This shows the inclination and mentality of the investor or a firm towards any specific instruments in which they are keen in investing .For those investors who want to be more risk averse their top holdings will be the safe financial instruments such as government bonds and treasury bills while those investors who are risk takers their top holdings will be more towards the equity side as they may provide good returns with high risk.
This top holding instruments may be the biggest revenue maker or biggest loser during the returns on the portfolio as they are in huge volume as compared to the other assets. So the entire returns on the portfolio will be majorly dependent on return on this holdings.
If the funds are contributed more towards this one or more top holdings this will make the portfolio less diversified as the investor will be left with less funds for the other instruments. So the top holdings should be smaller in volume so to make the portfolio more diversified.
One asset which may be among top holdings may not permanently remain top in the portfolio and may change from time to time as the investor or firm may change their investment strategies depending on the market conditions.