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What is the risk of a broad based portfolio versus a narrow portfolio?

What is the risk of a broad based portfolio versus a narrow portfolio?

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A broad based portfolio is designed to mimic the movement of the entire market. A good example of a broad based portfolio would be an investment in S&P500 or another broad based index which has a representation from most sectors. Broad portfolio is more susceptible to market risk, something which affects the entire market.

A narrow portfolio is focused on investing in a few chosen sectors/industries, country funds or thematic funds. A narrow portfolio may face diversification risk (not having adequate representation across the portfolio to spread the risk). It can also be more susceptible to business risk of the sectors, it is invested in.

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