what is market exposure 
market exposure refers to the dollar amount of funds or percentage of a broader portfolio that is invested in a particular type of security market sector or industry market exposure is usually expressed as a percentage of total portfolio holdings for instance as in 10 of a portfolio being exposed to the oil and gas sector or a 50 000 in tesla stock market exposure represents the amount an investor can lose from the risks unique to a particular investment or asset class it is a tool used to measure and balance risk in an investment portfolio having too much exposure to a particular area can indicate a portfolio needs to undergo broader diversification understanding market exposuremarket exposure describes the risk and reward potential for an investor given the division of assets within an investment portfolio the proportion of assets invested in any given asset class market segment geographic region industry or stock can be used to measure the degree to which the investor is exposed to potential loss due to those specific assets market exposure can be separated based on a variety of factors that then allows an investor to mitigate the risks involved in certain investments by balancing exposure via diversification to other asset classes regions or industries the greater one s market exposure the greater their total market risk in that specific investment area a concentration of market exposure in any one area can lead to large losses if that area happens to get hit hard investments can be segmented based on the type of asset class involved for example a portfolio can consist of 20 bonds and 80 stocks the investor s market exposure to stocks is thus 80 this investor stands to lose or gain more depending on how stocks perform than from how bonds perform 