Why overlap happens
Many funds draw from the same pool of large companies. A fund tracking a broad global index, a fund tracking a large US index and a fund focused on technology can all hold the same handful of very large companies, because those companies are large enough to appear in each fund's index.
Overlap is not a flaw in any one fund. It appears when you combine funds, because each one is described by its own factsheet rather than by what the others hold.
How to work out the overlap
For any company, multiply its weight in each fund by the amount you hold in that fund, then add up the results. Dividing by your total portfolio gives your exposure as a share.
- Fund A: £6,000 held. Company X is 5% of the fund
- £300
- Fund B: £4,000 held. Company X is 4% of the fund
- £160
- Your total exposure to Company X
- £460
- As a share of a £10,000 portfolio
- 4.6%
Neither fund shows more than 5% in Company X, but together they make up 4.6% of the whole portfolio. Doing this for every company by hand is what look-through does automatically.
What overlap does and does not mean
High overlap means a few companies carry more weight in your portfolio than any single fund's factsheet suggests. It does not mean the portfolio is wrong. Whether that matters depends on your goals and circumstances, which Ownsight does not know and does not advise on.
Funds held in different accounts, such as an ISA and a pension, still overlap when they hold the same companies. The account type changes tax treatment, not what the funds own.
Limits of any overlap check
Funds publish their holdings on different dates, some only show their largest holdings, and some use derivatives or other structures that are harder to read through. A check can only be as complete as the data it uses. Ownsight is in private preview. Fund holdings come from a demo dataset of each fund's largest holdings, so company-level totals cover the part we have data for, and the results say how much that is.
Questions
- Is overlap the same as diversification?
- They are related but not the same. Overlap is about the same companies sitting in more than one holding. Diversification is the wider question of how spread out your money is across companies, sectors, regions and asset types.
- Do ETFs overlap more than other funds?
- Overlap depends on what a fund holds, not on whether it is an ETF. Any two funds that draw from the same large companies can overlap.
- How can I see my own overlap?
- Add your holdings to the portfolio check. It lists every company that appears more than once and the total it makes up.
Try it on your own holdings
Add what you hold and see the companies, overlap, concentration and charges behind it. Ownsight never connects to your broker or bank.
See the overlap in your own portfolio