Fund Overlap Analysis
How Equily detects shared holdings between your ETFs and mutual funds.
What is Fund Overlap?
Fund overlap occurs when multiple funds in your portfolio — whether ETFs or mutual funds — hold the same underlying stocks. Even though you may hold different funds with different names, they might invest in many of the same companies.
A total US market ETF like VTI and an S&P 500 mutual fund both hold Apple, Microsoft, Amazon, and hundreds of other large US companies. The S&P 500 represents approximately 80% of the total US market by capitalisation, resulting in significant overlap.
Equily analyses both ETFs and mutual funds, examining the actual holdings of each fund in your portfolio to calculate how much of your investment is in stocks held by multiple funds.
Why It Matters
When multiple funds hold the same stocks, your portfolio may be less diversified than it appears. Understanding overlap reveals your effective diversification rather than just the number of funds you hold.
Effective vs nominal diversification.
Holding five funds does not mean five times the diversification. If those funds share significant holdings, your effective exposure to unique securities may be much lower than expected.
Correlation effect.
Overlapping holdings tend to move together. When two funds hold the same stocks, gains and losses in those stocks affect both positions simultaneously. This correlation is factored into the EPR diversification assessment.
Concentration amplification.
If Apple represents 7% of Fund 1 and 5% of Fund 2, and you hold both, your combined Apple exposure is higher than either fund alone would suggest. This can amplify single-stock concentration risk.
Data Limitations
Fund overlap analysis depends on the availability and completeness of holdings data. There are important limitations to be aware of.
Partial holdings data. Some funds only publish their top 10 or top 25 holdings publicly. When this is the case, Equily displays a coverage percentage indicator — for example, “~60% coverage” — so you know the analysis is based on partial data.
Update frequency. ETF holdings are typically updated daily or weekly. Mutual fund holdings may be updated less frequently — often monthly or quarterly — depending on the fund provider. The analysis reflects the most recent available data.
Data indicators. When analysing your portfolio, Equily shows the number of holdings analysed and the data date so you can assess the completeness and freshness of the analysis.
Despite these limitations, overlap analysis provides valuable insight into your portfolio's effective diversification.
How We Detect Overlap
For each pair of funds in your portfolio, Equily follows four steps.
1. Fetch holdings data.
Retrieves the underlying holdings of each fund from financial data providers.
2. Identify shared holdings.
Compares holdings across funds to find stocks that appear in both.
3. Calculate overlap contribution.
For each shared holding, calculates the overlap contribution using the minimum weight approach. If Apple is 7% of Fund 1 and 5% of Fund 2, the overlap contribution is 5%.
4. Apply your allocations.
Multiplies the overlap by your allocation to each fund to determine the portfolio-level impact.
Portfolio Impact Calculation
The portfolio impact represents what percentage of your total portfolio is invested in stocks held by both funds.
Portfolio Impact = (Allocation Fund 1 + Allocation Fund 2) x Overlap %
Say you hold 30% in VTI and 20% in an S&P 500 mutual fund. These funds have 80% overlap in holdings. The portfolio impact is (30% + 20%) x 80% = 40%. That means 40% of your portfolio is in stocks held by both funds.
Impact on EPR
Fund overlap affects the Diversification factor in your EPR score. The impact is categorised into four levels.
Low — Minor effect on EPR diversification score.
Medium — Moderate effect on EPR diversification score.
High — Significant effect on EPR diversification score.
Severe — Major effect on EPR diversification score.
EPR calculates your effective diversification — accounting for overlap between funds rather than just counting the number of funds you hold.
Common Overlap Scenarios
Some fund combinations have structural overlap due to how they are constructed.
Total Market + Large Cap
Total market funds like VTI or FSKAX contain all the stocks in large cap funds like VOO or VFIAX. The S&P 500 represents approximately 80% of the total US market by capitalisation.
Global + Regional
Global funds like VT or VTWAX contain stocks from regional funds. The overlap varies based on regional allocation within the global fund.
Sector + Broad Market
Sector funds like XLK or FSCSX hold stocks that are also in broad market funds. The overlap depends on the sector's weight in the broader index.
We identify and display overlap between your funds. We describe the impact on your EPR score. We don't tell you what to do about it.
You decide what level of overlap works for your situation.
See what's really inside your funds.
Analyse Your PortfolioNo sign-up required. No cost. Just clarity.