Market exposure refers to the degree to which an investment or a portfolio is affected by fluctuations in the market. It indicates the potential for an asset to gain or lose value in response to changes in market conditions, such as economic factors, interest rates, or investor sentiment. High market exposure means that an investment is more sensitive to market movements, while low market exposure suggests that the investment is relatively insulated from such fluctuations. Market exposure can be measured in various ways, including through beta coefficients, which compare the asset’s volatility to that of the broader market, or through portfolio allocation among different asset classes. Understanding market exposure is essential for investors as it helps them manage risk and make informed investment decisions based on their risk tolerance and market outlook.