Is ETF Overlap Hurting Your Portfolio? How To Check

Image by Getty Images; Illustration by Bankrate

Exchange-traded funds, or ETFs, have become one of the most popular investment products in recent decades. They can provide access to a diversified portfolio at low costs through a single investment fund. You can also diversify across asset classes by holding just a handful of low-cost ETFs.

But certain companies have become so widely held in the investment world that you may have more exposure to some stocks than you realize. Here’s an overview of ETF overlap, why it matters and how to determine if your portfolio is too concentrated in certain stocks.

What is ETF overlap and why should you care?

ETF overlap occurs when you hold multiple ETFs that are invested in the same underlying securities. This matters because most people invest in different ETFs to boost their portfolio’s diversification, but when these funds hold the same securities, the diversification benefits are reduced. 

For example, say you hold an ETF that tracks the S&P 500 and another ETF that tracks the Nasdaq 100. You may be surprised to see that you have a lot of exposure to the largest tech companies in the world, such as Nvidia (NVDA), Microsoft (MSFT) and Apple (AAPL). You may want to find a different ETF that adds greater diversification benefits to your portfolio. 

It’s worth noting that this issue can arise from holding different mutual funds as well as ETFs. The concept of overlapping holdings may also be known as fund overlap or asset overlap.

How to check if your portfolio is too concentrated

There isn’t a firm rule about when your portfolio becomes too concentrated. Some investors may feel comfortable with higher concentration levels, while others may prefer to be as diversified as possible. The point of understanding ETF overlap is to make you aware of your portfolio’s exposure. 

However, if you see that a particular security is held across multiple ETFs in your portfolio, you should think about how much of your portfolio is invested in a single stock. You may be surprised to find that one or two companies account for 5 percent or more of your total portfolio. If this is the case, you might consider diversifying into funds with less overlap to reduce your exposure to a single stock. 

Let’s take a look at the top holdings of two popular ETFs to see how they overlap. The SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ ETF (QQQ) are often used to provide growth in investors’ portfolios. Here’s how their top 10 holdings compare as of August 2025. 

You can see that there’s a lot of overlap between the two funds, so it wouldn’t make much sense to hold them both if you’re trying to get the benefits of diversification in your portfolio. 

It’s also worth paying attention to their different expense ratios. The Invesco QQQ ETF charges 0.20 percent (or $20 on a $10,000 investment, annually), while the SPDR S&P 500 ETF Trust charges 0.095 percent (or $9.50 on a $10,000 investment, annually). 

There are several tools that can help you evaluate the overlap of different ETFs. Here are some of the best:

• ETF Research Center: This website allows you to enter any two ETF tickers and instantly see how their holdings overlap. You’ll be able to see the different weights in each fund and the total number of overlapping holdings.
• ETF.com: This site allows you to easily compare two different ETFs and allows you to evaluate more than just the overlap in holdings. You can see how the funds differ in terms of cost, assets, performance and more.
• ETF Database: ETF Database also allows you to compare different ETFs and easily see how similar their holdings are and how funds compare on strategy and other key variables. 

Bottom line

Overlap between the holdings in different ETFs you’re invested in could leave your portfolio less diversified than you realize. Pay attention to the ETF overlap in your investments to make sure you’re getting the diversification you seek. 

If there’s a lot of overlap in your portfolio, you might consider consolidating your holdings into the fund with lower costs, or diversifying into a fund with less overlap. Fortunately, there are many tools that can help you compare different funds and identify when you may have an overlap problem. 

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.