Breadth (FLAM)
InvestingDefinition
Number of independent bets a portfolio makes. Plays a key role in Grinold's Fundamental Law of Active Management: high alpha requires either high IC or high breadth.
A small number of high-conviction picks (Buffett) and a large diversified factor portfolio (DFA, AQR) can both work — but you need either IC depth or breadth, not zero of both.
A small number of high-conviction picks (Buffett) and a large diversified factor portfolio (DFA, AQR) can both work — but you need either IC depth or breadth, not zero of both.