Younger investors spot the concentration trend at nearly twice the rate of those 55 and older
Only 57 percent of Canadian investors say they are familiar with index concentration, while 83 percent say they are confident their portfolios are well diversified.
Sixty-seven percent of respondents said they were concerned about market volatility affecting their investments over the next 12 months.
PICTON noted that diversification may help manage risk but does not guarantee profits or protect against losses, and that portfolios can still decline during market downturns.
Familiarity with index concentration divided by age in the polling: 68 percent among investors aged 18 to 34, against 46 percent among those aged 55 and older.
Among investors familiar with index concentration, 88 percent said they were confident in their portfolio diversification, compared with 67 percent of investors completely unaware of the issue.
Robert Wilson, head of innovation and portfolio strategist at PICTON Investments, said the findings suggest Canadian investors are approaching markets with confidence, but "confidence and understanding are not always the same thing."
Wilson said diversification involves more than the number of investments in a portfolio.
As markets become more concentrated, investors need to understand what they own and the risks beneath the surface of their portfolio, he said.
Mutual funds, GICs, stocks and ETFs are the most commonly held investments among Canadian investors.
Eight percent reported holding alternative investments.
Familiarity with alternative strategies such as hedge funds and liquid alternatives sat at 31 percent.
Sixty percent of investors said they would like to learn more about how alternative investment strategies could affect their portfolios, according to the polling.
Asked what would make them more comfortable considering those strategies, 25 percent pointed to a better understanding of the risks and benefits, 22 percent to a recommendation from their financial advisor and 20 percent to more education about how the strategies work.
Investors want to understand how portfolios can be built for current market conditions, Macan Nia, investment strategist at PICTON Investments, said.
According to Nia, the conversation around diversification should extend past owning more stocks and bonds to how different investments contribute to portfolio construction and risk management.
The figures come from polling of Canadian investors conducted by Pollara Strategic Insights for PICTON Investments.
