{"id":28598,"date":"2026-06-30T07:06:58","date_gmt":"2026-06-30T07:06:58","guid":{"rendered":"https:\/\/wp-api.pocketful.in\/blog\/?post_type=mutual-funds&#038;p=28598"},"modified":"2026-06-30T07:07:03","modified_gmt":"2026-06-30T07:07:03","slug":"what-is-mutual-fund-overlap","status":"publish","type":"mutual-funds","link":"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/what-is-mutual-fund-overlap\/","title":{"rendered":"What Is Mutual Fund Overlap?"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">An investor thinks that having too many schemes in their portfolio will lead to diversification, but it is not true. Even if you have invested in too many schemes, you might end up investing in similar stocks because of mutual fund overlapping.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In today\u2019s blog post, we will give you the answer to your question: what is mutual fund overlap?<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/what-is-mutual-fund-overlap\/#What_is_Mutual_Fund_Overlap\" title=\"What is Mutual Fund Overlap?\">What is Mutual Fund Overlap?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/what-is-mutual-fund-overlap\/#Example_of_Mutual_Fund_Overlap\" title=\"Example of Mutual Fund Overlap\">Example of Mutual Fund Overlap<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/what-is-mutual-fund-overlap\/#Types_of_Mutual_Fund_Overlap\" title=\"Types of Mutual Fund Overlap\">Types of Mutual Fund Overlap<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/what-is-mutual-fund-overlap\/#Benefits_of_Reducing_Portfolio_Overlap\" title=\"Benefits of Reducing Portfolio Overlap\">Benefits of Reducing Portfolio Overlap<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/what-is-mutual-fund-overlap\/#Reason_for_Mutual_Fund_Overlap\" title=\"Reason for Mutual Fund Overlap\">Reason for Mutual Fund Overlap<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/what-is-mutual-fund-overlap\/#Effects_of_Mutual_Fund_Overlap_on_Investors\" title=\"Effects of Mutual Fund Overlap on Investors\">Effects of Mutual Fund Overlap on Investors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/what-is-mutual-fund-overlap\/#How_to_Identify_Portfolio_Overlap_in_a_Mutual_Fund\" title=\"How to Identify Portfolio Overlap in a Mutual Fund?\">How to Identify Portfolio Overlap in a Mutual Fund?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/what-is-mutual-fund-overlap\/#How_to_Avoid_Portfolio_Mutual_Fund_Overlap\" title=\"How to Avoid Portfolio Mutual Fund Overlap?\">How to Avoid Portfolio Mutual Fund Overlap?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/what-is-mutual-fund-overlap\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/what-is-mutual-fund-overlap\/#Frequently_Asked_Questions_FAQs\" title=\"Frequently Asked Questions (FAQs)\">Frequently Asked Questions (FAQs)<\/a><\/li><\/ul><\/nav><\/div>\n<h2 id=\"h-what-is-mutual-fund-overlap\" class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Mutual_Fund_Overlap\"><\/span>What is Mutual Fund Overlap?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">A mutual fund overlap is a condition in which two or more mutual fund schemes of your portfolio hold common stocks. This mutual fund overlap causes you to invest in the same companies even after investing in different schemes. This eventually reduces the primary purpose of diversification through a mutual fund. A mutual fund overlap can increase the risk in the portfolio by investing in a specific sector or individual security.&nbsp;<\/p>\n\n\n\n<h2 id=\"h-example-of-mutual-fund-overlap\" class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Example_of_Mutual_Fund_Overlap\"><\/span>Example of Mutual Fund Overlap<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Let\u2019s understand the example of mutual fund overlap through an example.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Mr A has invested in two funds, namely Fund A and Fund B.<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Fund A belongs to the large-cap category, and Fund B belongs to the flexi-cap category. Now analyse the top 5 holdings of these two funds.<\/p>\n\n\n\n<h3 id=\"h-holding-of-fund-a\" class=\"wp-block-heading has-medium-font-size\">Holding of Fund A<\/h3>\n\n\n\n<figure class=\"wp-block-table has-small-font-size\"><table><thead><tr><th>Name of Stock<\/th><th>Weightage in Portfolio<\/th><\/tr><\/thead><tbody><tr><td>Reliance Industries Limited<\/td><td>10%<\/td><\/tr><tr><td>HDFC Bank Limited<\/td><td>8%<\/td><\/tr><tr><td>TCS Limited<\/td><td>8%<\/td><\/tr><tr><td>Infosys Limited<\/td><td>7%<\/td><\/tr><tr><td>ICICI Bank Limited<\/td><td>6%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 id=\"h-holding-of-fund-b\" class=\"wp-block-heading has-medium-font-size\">Holding of Fund B<\/h3>\n\n\n\n<figure class=\"wp-block-table has-small-font-size\"><table><thead><tr><th>Name of Stock<\/th><th>Weightage in Portfolio<\/th><\/tr><\/thead><tbody><tr><td>Reliance Industries Limited<\/td><td>9%<\/td><\/tr><tr><td>HDFC Bank Limited<\/td><td>9%<\/td><\/tr><tr><td>TCS Limited<\/td><td>8%<\/td><\/tr><tr><td>Bharti Airtel Limited<\/td><td>6%<\/td><\/tr><tr><td>Larsen and Toubro Limited<\/td><td>5%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Now, let\u2019s identify the overlap in Fund A and Fund B<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The following stocks are common to fund A and fund B<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Reliance Industries Limited<\/li>\n\n\n\n<li>HDFC Bank Limited<\/li>\n\n\n\n<li>TCS<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">If you have invested 10,000 in each fund A &amp; B, your total exposure in Reliance Industries will be around:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">1000 in Fund A and 9000 in Fund B, and a total exposure of around 1900 INR.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Similarly: HDFC Bank: \u20b9800 + \u20b9900 = \u20b91,700 &amp; TCS: \u20b9800 + \u20b9800 = \u20b91,600<\/p>\n\n\n\n<h2 id=\"h-types-of-mutual-fund-overlap\" class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Types_of_Mutual_Fund_Overlap\"><\/span>Types of Mutual Fund Overlap<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The key types of mutual fund overlap are as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Stock Overlap:<\/strong> This is one of the most common types of mutual fund overlap. It generally happens when two mutual funds hold the common stock in their portfolio.<\/li>\n\n\n\n<li><strong>Sectoral Overlap:<\/strong> Sector overlap happens when different mutual fund schemes invest in the same sector or industry, even when the individual stocks are different.\u00a0<\/li>\n\n\n\n<li><strong>Overlap in Market Capitalisation:<\/strong> This type of overlap happens when multiple funds invest in companies having market capitalisation of a similar category, such as large-cap, small-cap, etc.<\/li>\n\n\n\n<li><strong>Investment Style Overlap: <\/strong>This overlap occurs when the different schemes in which you have invested follow similar investment strategies, such as a value strategy, a growth-oriented strategy, etc.<\/li>\n\n\n\n<li><strong>Category Overlap:<\/strong> This usually occurs when an investor is used to investing in a similar category of mutual fund. For example, if an investor invests in two large-cap funds.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Read Also:<\/strong> <a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/why-mutual-funds-are-going-down\/\">Top Reasons Why Mutual Funds Are Going Down<\/a><\/p>\n\n\n\n<h2 id=\"h-benefits-of-reducing-portfolio-overlap\" class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Benefits_of_Reducing_Portfolio_Overlap\"><\/span>Benefits of Reducing Portfolio Overlap<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The key benefits of reducing portfolio overlap are as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Diversification<\/strong>: Reducing portfolio overlap increases the diversification and reduces the overall portfolio risk. If the investments are spread across asset classes, stocks, sectors, etc., the performance of your portfolio will increase.<\/li>\n\n\n\n<li><strong>Concentration Risk:<\/strong> Overexposure to a particular stock, sector, etc., might lead to poor performance of a portfolio and can negatively impact the returns.<\/li>\n\n\n\n<li><strong>Long-Term Growth:<\/strong> Investment across different market segments allows investors to gain benefits from various growth opportunities.<\/li>\n\n\n\n<li><strong>Portfolio Rebalancing: <\/strong>Portfolios having different funds and portfolios are simpler to review and rebalance. One can easily identify the underperforming funds and make an informed investment decision.\u00a0<\/li>\n<\/ul>\n\n\n\n<h2 id=\"h-reason-for-mutual-fund-overlap\" class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Reason_for_Mutual_Fund_Overlap\"><\/span>Reason for Mutual Fund Overlap<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The key reasons for mutual fund overlap are as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Regulatory Mandate: <\/strong>The SEBI has introduced the categorisation rule for asset management companies on what they can buy under the regulation. Due to this mandate, the investable universe is restricted.<\/li>\n\n\n\n<li><strong>Investment Objective:<\/strong> Lots of mutual funds have similar investment goals, such as long-term capital appreciation, which increases the chance of fund overlap.<\/li>\n\n\n\n<li><strong>Sector Performance:<\/strong> Sometimes, when a particular sector has strong growth potential in the future, every fund manager focuses on that sector and takes some allocation in it. This may lead to portfolio overlap.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"h-effects-of-mutual-fund-overlap-on-investors\" class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Effects_of_Mutual_Fund_Overlap_on_Investors\"><\/span>Effects of Mutual Fund Overlap on Investors<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The key effects of mutual fund overlap on investors are as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Less Diversification:<\/strong> One of the key impacts on investors due to mutual fund overlap is that it reduces diversification. If various mutual fund holds same stocks, it concentrates your portfolio.<\/li>\n\n\n\n<li><strong>Limited Return: <\/strong>If an investor owns mutual funds that have similar holdings, then the investor is supposed to get limited returns because of lesser diversification.<\/li>\n\n\n\n<li><strong>Higher Volatility:<\/strong> Generally, a portfolio with high overlap is considered more volatile as it becomes more sensitive to market fluctuations. As the common stocks in the portfolio face a sharp correction, your portfolio will decline simultaneously.<\/li>\n\n\n\n<li><strong>Sectoral Imbalance in Portfolio: <\/strong>In case of portfolio overlap, an excessive exposure to a few specific sectors, such as IT, banking, etc., can lead to an imbalance in sectoral allocation of the portfolio.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"h-how-to-identify-portfolio-overlap-in-a-mutual-fund\" class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_Identify_Portfolio_Overlap_in_a_Mutual_Fund\"><\/span>How to Identify Portfolio Overlap in a Mutual Fund?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">There are very few methods through which an investor can identify the overlap in their portfolio:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Comparison of Holding:<\/strong> One of the easiest ways to identify overlap in the portfolio is to compare the top holdings of the funds in which you have invested.<\/li>\n\n\n\n<li><strong>Checking Percentage:<\/strong> Instead of looking only for the names of stocks having common holdings, one can also check the percentage of identical holdings.<\/li>\n\n\n\n<li><strong>Using Tools: <\/strong>There are various tools available in the market through which one can calculate the portfolio overlap, as they can easily compare two or more mutual fund schemes.<\/li>\n\n\n\n<li><strong>Checking Sectoral Allocation:<\/strong> Along with the common stocks, an investor can also check the sectoral allocation in the portfolio and identify if they are heavily invested in the same sector.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"h-how-to-avoid-portfolio-mutual-fund-overlap\" class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_to_Avoid_Portfolio_Mutual_Fund_Overlap\"><\/span>How to Avoid Portfolio Mutual Fund Overlap?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The steps to avoid portfolio overlap are as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Identify your investment objective:<\/strong> Before investing in a mutual fund, one should know their financial goal, risk tolerance, and investment horizon. It helps in allocating your portfolio in a proper manner.<\/li>\n\n\n\n<li><strong>Avoid Multiple Categories:<\/strong> An investor should avoid investing in two or three funds of the same category to avoid overlapping of funds. As they have similar investment objectives and stocks.<\/li>\n\n\n\n<li><strong>Diversification across asset classes:<\/strong> To eliminate risk in the portfolio, one is required to diversify their portfolio across different asset classes such as equity, debt, hybrid, etc.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Read Also:<\/strong> <a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/best-sip-for-10-years\/\">Best SIP Plan for 10 Years in India<\/a><\/p>\n\n\n\n<h2 id=\"h-conclusion\" class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">On a concluding note, portfolio overlap is very common today, especially among new mutual fund investors. Without knowing the disadvantages of it, they tend to invest in similar types of schemes. This can adversely impact their portfolio returns, especially in the case of a volatile market. Therefore, a well-diversified portfolio across different schemes, sectors and asset classes helps an investor in optimising their returns. However, over-diversification may also lead to certain disadvantages; therefore, it is advisable to consult your investment advisor before making any <a href=\"https:\/\/www.pocketful.in\/mutual-funds\">investment in mutual funds<\/a>. Invest smarter with <a href=\"https:\/\/www.pocketful.in\/\">Pocketful<\/a> by accessing 2,000+ mutual fund schemes with zero brokerage and a seamless digital investing experience.\u00a0<\/p>\n\n\n\n<figure class=\"wp-block-table has-small-font-size\"><table><thead><tr><th class=\"has-text-align-left\" data-align=\"left\">S.NO.<\/th><th class=\"has-text-align-left\" data-align=\"left\">Check Out These Interesting Posts You Might Enjoy!<\/th><\/tr><\/thead><tbody><tr><td class=\"has-text-align-left\" data-align=\"left\">1<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/build-a-mutual-fund-portfolio\/\">How to Build a Mutual Fund Portfolio<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">2<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/best-silver-mutual-funds-in-india\/\">Best Silver Mutual Funds to invest in India<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">3<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/best-brokers-for-mutual-funds\/\">Best Brokers for Mutual Funds<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">4<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/best-money-market-mutual-funds-in-india\/\">Best Gold Investment Schemes in India<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">5<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/best-money-market-mutual-funds-in-india\/\">Best Money Market Mutual Funds in India<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">6<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/best-thematic-mutual-funds-in-india\/\">Best Thematic Mutual Funds in India<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">7<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/top-mutual-fund-distributors-in-india\/\">Top 10 Mutual Fund Distributors in India<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">8<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/corporate-bond-funds\/\">Best Corporate Bond Funds in India<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">9<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/best-long-term-mutual-funds\/\">Best Long-Term Mutual Funds to Invest in India<\/a><\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\">10<\/td><td class=\"has-text-align-left\" data-align=\"left\"><a href=\"https:\/\/www.pocketful.in\/blog\/mutual-funds\/best-mid-cap-mutual-funds\/\">Best Mid-Cap Mutual Funds in India<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 id=\"h-frequently-asked-questions-faqs\" class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions_FAQs\"><\/span>Frequently Asked Questions (FAQs)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"saswp-faq-block-section\"><ol style=\"list-style-type:none\"><li style=\"list-style-type: none\"><h3 class=\"\">What is mutual fund overlap?<\/h3><p class=\"saswp-faq-answer-text\">A mutual fund overlap is a condition in which an investor has too many schemes in their portfolio,\u00a0 but still ends up investing in similar stocks.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">How much overlapping of mutual fund portfolios is considered normal?<\/h3><p class=\"saswp-faq-answer-text\">Generally, an overlap of below 20-25% is considered normal, and above that requires a portfolio review.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">Do I need to sell my mutual fund units if they have high overlap?<\/h3><p class=\"saswp-faq-answer-text\">No, you do not need to sell your mutual fund units if they have high overlap, but you need to consult your investment advisor and evaluate your investment objective and risk profile.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">Does portfolio overlap increase risk in the portfolio?<\/h3><p class=\"saswp-faq-answer-text\">Yes, portfolio overlap increases market risk in the portfolio.<\/p><li style=\"list-style-type: none\"><h3 class=\"\">Is portfolio overlap in a mutual fund portfolio always bad?<\/h3><p class=\"saswp-faq-answer-text\">No, portfolio overlap in mutual funds is very common; it is not always bad, but reducing overlap can limit losses in the portfolio.<\/p><\/ul><\/div>","protected":false},"excerpt":{"rendered":"<p>An investor thinks that having too many schemes in their portfolio will lead to diversification, but it is not true. Even if you have invested in too many schemes, you might end up investing in similar stocks because of mutual fund overlapping. In today\u2019s blog post, we will give you the answer to your question: [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":28603,"parent":0,"menu_order":0,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[19],"tags":[],"class_list":["post-28598","mutual-funds","type-mutual-funds","status-publish","format-standard","has-post-thumbnail","hentry","category-mutual-funds"],"acf":{"freelancer":"Harjyot"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v20.13 (Yoast SEO v21.2) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What Is Mutual Fund Overlap? Meaning, Types, Examples &amp; How to Avoid It<\/title>\n<meta name=\"description\" content=\"Learn what mutual fund overlap is, why it matters, its types, causes, and how to identify and reduce portfolio overlap to build a well-diversified investment portfolio.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Is Mutual Fund Overlap?\" \/>\n<meta property=\"og:description\" content=\"Learn what mutual fund overlap is, why it matters, its types, causes, and how to identify and reduce portfolio overlap to build a well-diversified investment portfolio.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/wp-api.pocketful.in\/blog\/mutual-funds\/what-is-mutual-fund-overlap\/\" \/>\n<meta property=\"og:site_name\" content=\"Pocketful\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Pocketful.HQ\/\" \/>\n<meta property=\"article:modified_time\" content=\"2026-06-30T07:07:03+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/cms-resources.pocketful.in\/blog\/wp-content\/uploads\/2026\/06\/Mutual-Fund-Overlap.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1497\" \/>\n\t<meta property=\"og:image:height\" content=\"1080\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:site\" content=\"@Pocketful_HQ\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"6 minutes\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"What Is Mutual Fund Overlap? 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