Capital concentration across managers with similar strategies

Splitting capital among several managers can look diversified while every account depends on the same market move or infrastructure. Different people or account names do not create independent risk. Concentration review should go beyond counting managers and identify what their methods and exposures share.

Move from strategy labels to reviewable behaviour

Methods with different titles may share instruments, direction and entry timing. Conversely, the same label does not establish identical behaviour. Read position reports, constraints and non-confidential method descriptions together. Where information is insufficient, do not assume independence or fill the gap with a precise invented score.

A hypothetical shared direction across three managers

Suppose capital is split among three accounts but all are mainly exposed to one currency strengthening during a period. There are three managers, yet an opposing currency move can affect all three together. This example reports no actual account results and predicts no amount of combined loss.

Capital weight is not risk contribution

Equal allocations can have different leverage and volatility. A smaller account with greater exposure can materially affect the combined outcome. Adding nominal quantities across different instruments is insufficient too; contract sizes, currencies and open-position status must be understood.

What should a shared-exposure map cover?

• Main markets, instruments and exposure directions.
• Holding periods, entry timing and responses to losses.
• Dependence on news, liquidity or particular market conditions.
• Common hosts, software, data sources and execution routes.
• Missing information and the last review date.

Historical correlation is not a complete answer

Read correlation with its period, sampling frequency and consistent data basis. A short history or irregular valuations can limit interpretation. Behaviour under stress may differ from a calm period. A low past figure does not guarantee the absence of simultaneous future losses.

Separate infrastructure concentration from market concentration

Managers trading different markets may depend on the same host or access route. A shared disruption can make monitoring or exit difficult at the same time even if historical trading outcomes have low correlation. Diversity of manager names alone does not remove that dependency.

Keep conclusions bounded and traceable

Record supported common features, hypotheses and unknowns separately. A method change or capital transfer may call for another review. This article supplies no suitable allocation ratio and instructs no portfolio change. When reviewing accounts, compare methods alongside one another and use calculation tools only for explicit scenarios. This framework guarantees neither diversification nor reduced losses and claims no automatic calculation of every product exposure.