What is Portfolio Overlap?
Portfolio overlap is the percentage of shared underlying stocks between two or more mutual funds. If two funds both hold HDFC Bank, Reliance Industries, and Infosys, your portfolio may look diversified by fund count but concentrated by stock exposure.
Key Takeaways
- •Overlap is measured at the stock level, not just fund level.
- •High overlap reduces diversification benefits.
- •Overlap analysis helps identify hidden concentration risk.
FAQ
Is overlap the same as correlation?
No. Overlap measures shared holdings. Correlation measures how returns move together.
