How to measure ETF overlap
Each fund publishes its holdings and weights. For any two funds, take every stock they both hold, and for each one use the smaller of the two weights. Add those up.
| Stock | Fund A weight | Fund B weight | Shared (smaller) |
|---|---|---|---|
| Company 1 | 7% | 8% | 7% |
| Company 2 | 6% | 7% | 6% |
| Company 3 | 5% | 0% | 0% |
| Total shared | 13% |
In this example, 13 percent of each fund is in the same two companies. If you hold half in each fund, that duplication is about 13 percent of the combined portfolio.
Why there is no single threshold
Overlap is a question of what you are trying to avoid:
- Duplicated stock risk. If one company is a large part of both funds, a fall in that company hits you twice.
- Duplicated theme risk. Two funds can hold different companies but the same theme, such as large US technology. Stock-level overlap misses this, so also check sector and theme exposure.
- Diversification you think you have. Adding a second broad fund often adds little new exposure if the first already covers the same index.
A common practical approach is to set a limit for the whole portfolio, for example no single stock above a fixed share once every fund is counted, and review when a rule is breached.
Where the numbers come from
Overlap is only as good as the holdings data. Funds publish holdings on different schedules, and top-holdings lists often omit small positions, so overlap calculated from disclosed holdings is usually a lower bound. Atradian's Portfolio X-ray shows overlap between your funds on this basis, and it says so next to the count.
What to do with the result
- If the shared weight is small, the funds are doing different jobs.
- If it is large, decide whether you want that exposure. Often the fix is to drop one fund, not to add more.
- Check the result again after each rebalance, because weights drift.
See how to check portfolio concentration risk for stock-level concentration, which overlap does not capture on its own.