Explore commonly used personal finance terms.
An aggregation limit is a restriction placed by investment funds or portfolio managers on the maximum exposure allowed in a specific asset class, sector, or individual investment to prevent excessive risk concentration. This limit helps maintain diversification, which is crucial for risk management. For example, a mutual fund might limit exposure to a particular sector to avoid volatility. Aggregation limits protect against overexposure to one asset, helping investors achieve a balanced portfolio that aligns with their risk tolerance.
