Glossary
Effective number of assets
A concentration measure showing how many equally-weighted holdings a portfolio is equivalent to, regardless of how many companies it actually owns.
What it is
The holding count, weighted by what each position actually carries
The effective number of assets is calculated as the inverse of the Herfindahl index, the sum of each holding's weight squared. The measure penalizes a portfolio where individual positions carry much more weight than the rest, even if the actual holding count is high. A portfolio of 30 holdings where three positions make up half the capital has a lower effective number of assets than the actual holding count suggests.
- 20 equally-weighted holdings
- Gives an effective number of assets of exactly 20.0, since every position carries exactly the same weight as the others.
- The same 20 holdings, unevenly weighted
- Gives a lower figure than 20.0. The more concentrated the capital is in a handful of positions, the lower the figure.
- A complement to the actual holding count
- The actual count tells you how many companies a fund owns. The effective number of assets tells you how concentrated the risk actually is, which is rarely the same thing.
In practice
Why two funds with the same holding count can be differently concentrated
Two funds can both own 30 companies and still carry entirely different risk, if one weights its best ideas considerably more heavily than the other. The effective number of assets captures that difference in a way a simple holding count doesn't. The measure says nothing about the quality of the underlying companies, only how evenly or unevenly the capital is spread across them.
Amos Value's effective number of assets in August 2026
25.9
“Quality with a margin of safety.”
Common questions about the effective number of assets
Related concepts
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