When three equity ETFs still leave you concentrated
How overlapping mega-cap holdings hide inside funds that look diversified on a factsheet.
Investors often assume that owning a US large-cap fund, a “world” equity fund, and a technology fund spreads risk. In allocation reviews we frequently find the opposite: the same handful of mega-cap names appear in all three, so a bad week for those names hits every sleeve at once.
What the factsheet will not shout
Factsheets emphasise country lists and sector pies. They rarely show the top-ten overlap between your specific funds. Two global products from different issuers can share seven of their ten largest holdings. Adding a sector fund on top does not diversify — it doubles down.
A simple check before you buy another fund
List the top ten holdings of every equity ETF you own. Highlight names that appear more than once. If the highlighted set already dominates your equity risk, a new fund needs a role that those names do not fill — for example, genuinely smaller companies, a different region with limited listing overlap, or a bond sleeve you have neglected.
What we do in session
During an ETF Allocation Review we build that overlap view before you arrive. The conversation then moves from “I own several funds” to “here is where risk actually sits,” which is a more useful place to decide on rotation or rebalance steps.