Effective number of holdings

A fund can hold 1,500 companies and still depend heavily on a few of them. The effective number of holdings counts positions by weight rather than by number: a fund with 100 holdings of 1% each has an effective number of 100, while a fund whose largest ten make up most of its value has a much smaller one.

The figure is the inverse of the Herfindahl index, a standard measure of concentration. It is always at or below the number of holdings, and the gap between the two shows how unevenly the money is spread.

It is worked out only when the issuer publishes the whole portfolio. From a top-ten extract it would describe the ten lines, not the fund, so the figure is left out. It describes the portfolio on its publication date and changes as prices and holdings move.