Pity the portfolio manager who owns just 20 stocks instead of 200.

Instead of riding out the market turmoil of the past couple of days in scores of holdings, many managers who run concentrated portfolios have taken it on the chin.

(ATCHX)

Amerindo Technology, for example, which held just 28 stocks as of Dec. 31, lost 12.9% on Monday and Tuesday -- more than four times the average domestic stock fund's 3.2% loss for those days.

(JAVLX)

Janus Twenty and

(MFOCX) - Get Report

Marsico Focused, two of the biggest and best-known concentrated funds, lost 6% and 5.1%, respectively.

Over the past few years, investors have shown increasing enthusiasm for owning concentrated funds. The market itself has been narrower than ever, with a small number of companies driving most of the gains. Investors flocked to funds that placed outsized bets on a select group of power stocks. Janus Twenty, which has returned an average of 42.8% annually for the past five years, was forced to close to new investors a year ago after assets topped $26 billion. (They now exceed $37 billion.)

Not all concentrated funds were hit hard in the two-day selloff. And those that were tended to be heavily weighted in technology. But this week's market carnage still illustrates the risks that come with the strategy.

"It's very difficult for a concentrated portfolio to hide when stocks are going down," says David Brady, who manages the

(SRLFX)

Stein Roe Large Company Focus fund in Chicago. That fund usually invests in 20 to 25 stocks, compared with 141 for the average domestic equity fund, says

Morningstar

. And in Monday's and Tuesday's selloff, Large Company Focus fell 3.8%.

But even though they say their bare bones portfolios leave them more exposed to volatility than other fund managers, managers of these funds, not surprisingly, say they wouldn't do it any other way.

"It's much more likely that a portfolio manager understands all the stocks in his fund if he's got just a few," says Brady.

Others couldn't agree more. "Somewhere beyond 30 names, you start to defuse your returns, and diversification doesn't add that much value," says John Van Harte, portfolio manager of the $333 million

(TEQUX)

Transamerica Premier Equity fund, which fell just 1.2% on Monday and Tuesday, defying the trend.

"In a volatile market, you don't necessarily see greater volatility from focused funds," insists John Park, manager of the $63 million

(ACTWX) - Get Report

Acorn Twenty fund of Chicago.

True, focused funds can diversify by seeking out issues of companies in different areas of the economy. In the 20-stock Acorn portfolio, for example, Park has socked away assets in some incongruent industries. His lineup includes such odd combinations as furniture maker

Herman Miller

(MLHR) - Get Report

and health insurance provider

First Health

(FHCC)

.

Robert Turner, manager of the

(TTOPX)

Turner Top 20 fund, says days like Tuesday allow him to diversify beyond the technology names that have been a staple of his fund for much of the last year. Instead of those names, Turner added

Delta Air Lines

(DAL) - Get Report

and drug maker

Pfizer

(PFE) - Get Report

. He says he also spent the day looking for semiconductor makers.

But with a large portion of the fund in stocks like

Microsoft

(MSFT) - Get Report

,

Clear Channel

(CCU) - Get Report

and

UPS

(UPS) - Get Report

, the fund still got pounded. Its two-day losses add up to 6.7%.