How PortLens measures concentration, diversification and exposure

PortLens uses end-of-day price and reference data from Yahoo Finance. It is daily and indicative — not real-time, and not execution-grade. Figures reflect the most recent close, not live intraday prices.

For each holding you enter, PortLens multiplies the quantity by the latest available price to get a market value, then divides each holding's value by the portfolio total to get its weight. Every concentration and exposure figure below is built from those weights.

Concentration is measured as the share of your portfolio's value held in its three largest positions. If your top three holdings are 55% of the portfolio, more than half of the outcome is decided by those three names — regardless of how many holdings you own in total.

This is a description of where your portfolio's value sits. PortLens does not label it good or bad, safe or dangerous — it simply makes the number visible.

The effective number of holdings is a way of expressing how concentrated your portfolio weights are — the number of equally weighted positions that would produce the same level of concentration.

It is calculated as 1 ÷ HHI, where HHI is the Herfindahl–Hirschman Index: the sum of the squared portfolio weights. A portfolio of twenty equally weighted holdings has an effective number of twenty; a portfolio of twenty holdings dominated by two or three names can have an effective number of four or five.

This measures weight concentration only. It does not measure whether your holdings are correlated, whether they are economically independent, or whether they share underlying drivers — those are separate questions addressed below.

Different holdings can move for the same reason. PortLens estimates each holding's exposure to a set of economic forces that do much of the moving on the ASX — the major banks, iron ore and resources, Chinese demand, interest rates, global growth, and the Australian dollar — and aggregates them across the portfolio.

For ETFs and managed funds, PortLens applies a look-through estimate of the fund's economic exposure rather than its full, current constituent list. This means overlap between funds is expressed as shared economic exposure — not as an exact percentage of shared constituents, which would require complete, up-to-date holdings data for every fund.

These are estimates of the shape of your exposure. They describe what your portfolio leans on; they do not predict what those forces will do next.

PortLens reports the share of your portfolio's value invested offshore — directly-held global stocks plus international and global ETFs — and the currencies involved. Hedged funds reduce currency exposure; unhedged funds carry it.

PortLens is explicit about the limits of its own analysis. Every holding falls into one of three categories:

• •Fully modelled — a directly-held ASX company with estimated economic exposures (e.g. a major bank).
• •Estimated / look-through — a fund whose economic exposure is estimated from its mandate and sector (e.g. a broad-market ETF).
• •Valued but not modelled — an asset whose value and weight are counted, but whose economic exposure is not modelled. Digital assets are the clearest example: they are shown as valued holdings, marked as highly volatile, and their equity-factor exposure is explicitly not modelled rather than guessed.

Being clear about the boundaries is part of the method:

• •No grade or score for your portfolio, and no risk bands like 'safe' or 'dangerous'.
• •No buy, sell or hold recommendations, and no personal financial advice.
• •No prediction of prices, returns or what any economic force will do next.
• •No claim that the data is real-time or execution-grade — it is end-of-day and indicative.
• •The effective number of holdings is not a measure of correlation or economic independence.
• •Fund overlap is estimated economic exposure, not a fabricated percentage of shared constituents.

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