Over 700 finance terms, Shmooped to perfection.
Diversification. "75! 5! 10!" is not what a quarterback screams to signal a roll out pass. Rather, the term refers to a formula investment managers may use to market or advertise their funds: To qualify for legally being able to claim that their fund is diversified, the fund must have 75% of its holdings in no more than 5% positions in any one security. And it can't own more than 10% of any one company's outstanding securities. But note that for 25% of the portfolio, the fund can "violate" the diversification rules tagged under the 75% umbrella - a common test question relates to the maximum that a fund can own of one security and still call itself "diversified" and the answer is usually 30%.