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Fund selection
What is overlap between funds and why should I check it?
Explanation of overlap when funds hold many of the same underlying companies and why this matters.
Published 8 August 2026 3 min read
The short answer
Overlap means two or more funds hold the same securities. High overlap reduces the benefit of diversification when you hold several funds because you are effectively concentrated in the same companies.
Why overlap matters
Holding multiple funds with the same top holdings increases concentration risk and may duplicate fees. Check overlap to ensure distinct exposures if you want genuine diversification.
How to check
Review top holdings and sector/geographic splits of each fund. Some platforms offer overlap tools to compare holdings side by side.
What this means in practice
- 1List the top 10–20 holdings of funds you are considering and compare them.
- 2Check the geographic and sector exposures of each fund.
- 3Decide if the overlap matches your intended exposure or creates unwanted concentration.