What is the primary investment strategy that involves limiting one investment within a class to 5-10% of total assets?

The primary investment strategy that focuses on limiting one investment within a class to 5-10% of total assets is diversification. This strategy aims to reduce risk by spreading investments across various financial instruments, sectors, or asset classes. By limiting the percentage of any single investment, diversification helps protect the overall portfolio from the volatility and poor performance of any one asset.

In this context, if an investor were to have a significant amount of their total assets concentrated in a single investment, they would face higher risks if that investment underperformed. By adhering to the practice of limiting individual investments to a small percentage of the total, investors can minimize potential losses while also potentially benefiting from various performance sources across their portfolio.

The other options each address different concepts related to investing. Concentration involves focusing investments heavily in a particular asset or class, which runs counter to the idea of limiting investment percentages. Risk management encompasses a broader set of strategies, including diversification but also other risk-reducing approaches. Asset allocation refers to the overall distribution of an investor's assets across different classes, which may include a variety of strategies, one of which could be diversification.