If you are an investor with a moderate risk appetite, portfolio concentration will be important. If a Mutual Fund is overweight on a single sector or stock, it is best to avoid investing in that fund as it will be risky for you. Also, Mutual Funds may have different names but they could invest in the same stocks. So, you need to know how much company-specific risk or sector risk is present in your portfolio. After all, you don’t want your portfolio to be overly dependent on a few stock or a single sector. Portfolio overlap and concentration defeats the objective of diversification. So, you must look at these before investing in Mutual Funds.