My article on Best Equity Funds is one of the most popular articles on Relakhs.com. I have been receiving lot of queries on how to compare and select the best Equity oriented mutual funds. I have noticed that many investors prefer to invest in lot of funds to achieve diversification. Too many funds, especially from the same Fund category may lead to unnecessary ‘Portfolio Overlap’.
Two seemingly different mutual fund schemes can own the same set of stocks. In such a scenario there is no real purpose of holding two funds. Portfolio overlap leads to redundancy.
In this post let us understand – What is mutual fund portfolio? How to check the portfolio of stocks owned by your mutual fund? What is Mutual Fund Portfolio Overlap? How to compare and check mutual funds portfolio overlap? How to know common stocks owned by two or more funds? Which are the best and free online mutual fund portfolio overlap comparison tools?
What is Mutual Fund Portfolio?
A mutual fund is an entity that pools the money of many investors (unit-holders) to invest in different Financial Securities. These investments may be in shares, debt securities, money market securities or a combination of these, as per the fund’s investment objective.
Equity or Balanced (Hybrid) funds primarily invest in shares of companies. Whereas, Debt mutual funds invest in Fixed income securities.
How to check the Portfolio of Stocks owned by a Mutual Fund Scheme?
You can find the portfolio details of a mutual fund scheme on respective Fund House website (or) on online portals like moneycontrol.com or valueresearchonline.com.
For example – If you want to find out the portfolio of stocks owned by HDFC Top 200, follow the below steps;
Mutual Fund Overlap occurs when you own two or more mutual funds that may have similar investment objectives and therefore hold many of the same securities.
Let’s say you would like to invest in Fund ABC and also in Fund XYZ. After checking their portfolio holdings, you find that Fund ABC owns three companies’ stocks i.e., Infosys, TCS & SBI and Fund XYZ has invested in Infosys, TCS & Reliance.
Here, you could clearly see that there is too much of a portfolio overlap. Both the funds have invested in Infosys and TCS shares. These are the common stocks owned by both the funds.
As an investor, you don’t want too much of an intersection between the circles- you want the least amount of overlap possible.
Free Mutual Fund Portfolio Overlap Comparison Tools
You may use the below Mutual Fund Portfolio comparison tools to analyze the extent of portfolio overlap among the holdings of your mutual funds.
Why & How to avoid Mutual Fund Overlap?
You may not achieve true ‘Diversification’ just by investing in too many mutual fund plans. You may be surprised to learn that many of your mutual funds overlap. There can be a real danger in mutual fund overlap, and you may not be as diversified as you think.
Having your mutual funds overlap with one another is not the end of the world. When you are comparing the portfolios of two mutual fund schemes, there will definitely be some overlap.. The real issue is the extreme case where you own several mutual funds in the same fund category, investing in the exact same stocks. You run the risk of not being properly diversified in your investing portfolio.
Better diversification can lead to ‘downside protection’ and ‘controlled volatility’. Diversification ensures that if one sector had poor performance, or one stock within a sector struggled, your entire investment kitty doesn’t go down the drain.
It is advisable to understand the type of investing objective of each mutual fund that you own (or planning to invest) and consider spreading out amongst large cap, mid cap, and small cap mutual funds. Also, it is better to avoid the owning too many funds managed by the same fund manager.
You may use the above tools when choosing a mutual fund to avoid portfolio overlap.
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This post was last modified on July 10, 2023 9:10 pm
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View Comments
Dear sreekanth,
I want to invest money in some new company. Which is very newly in market. I want to take risk. Either their pay me out of thinking or i lose the money. How and where i get list of new company. In some real story i hear like wipro or some good company where people made lot of money due to his luck or may b hard work of entrepreneur. Plz suggest me. I wil thankful to u.
Dear Malik,
I can not advice you regarding this.
You may stick to my earlier suggestions on MFs.
Hi sreekanth,
my child is two years old and i want to invest 100000 rs in lumsum in one year.Tell me some plan where i invest to get better return. I want to keep continuing for 15years.thanks bro
Malik
Dear Malik,
You may choose two to three funds - one diversified, one mid-cap and one balanced fund for this.
Ex : Franklin Prima plus, UTI mid-cap and HDFC Balanced fund.
Kindly read : Best Equity funds.
Hi Sreekanth, Great informative article. I have already started sip in below funds from 2015. Now, I want to invest extra 4000 pm in some midcap or small cap or Balanced fund(my age is 29). Please suggest one more good fund for long term(5 to 10 years) investment. I have selected "Franklin India Smaller Cos Fund-G", but there is 30% overlap with HDFC mid-cap. Please suggest one good fund. Thanks.
HDFC mid-cap opp. growth (MidCap) - 3000
ICICI focused bluechip growth (LargeCap) - 3000
Is it good to invest in sip during bull/ bear?
Dear Archana..Your financial goal(s), investment objective and investment time-frame are more important.
Bull & Bear phases are part of investment cycles.
Hi !
A very informative blog .
I ma 25. I would like to know how to diversify my SIP investments
Thanks in advance
Dear Anitha..Kindly share details about your Financial goals, investment objectives/time-frame??
Dear Sir,
I am awaiting for your reply as soon as possible for my early mails. I am aged 41 years and ready to take to high risk in the portfolio management.
Thanking you.
Dear Sir,
I have invested in the below mentioned funds. I kindly request you to help me to analyse my portfolio and suggest necessary changes like removal and addition of portfolios. Also I kindly request you to help me how to avoid mutual fund overlap. Also advise me whether or not to invest in UTI Nifty and Sensex ETF,also can I purchase mutual funds thru online and which is the best.
1.HDFC mid cap opportunities fund Growth
2.SUNDARAM Select Mid cap Growth
3.SUNDARAM world brand fund Growth
4.UTI Equity fund Growth
5.UTI Floating Rate fund STP Growth
6.UTI focussed equity fund series-II Growth
7.UTI Master Share unit scheme Dividend
8.UTI MNC fund Dividend
9.UTI opportunities fund Dividend
10.UTI pharma and Healthcare Dividend
11.UTI Spread Fund Growth.
12.UTI Transportation and Logistics Growth
13.UTI Wealth Builder fund series-II Dividend
14.SBI Magnum Global fund Growth
15.ICICI Focussed Bluechip Equity fund Growth
16.ICICI Value Discovery fund Growth
Thanking you.
Dear Chokkalingam,
What is the reason behind investing in so many funds? What are your financial goals? What is your investment time-frame?
Why is UTI AMC your favorite pick?
Sreekanth,
I am a regular follower of your website. I want to congratulate you for sharing lot of information on wealth creation.
I am 36 years old working professional relatively new in investment. I want to start SIP of ₹3000/- per month for 5 to 10 years. My investment goals are Child education and corpus for any emergency. Please suggest 2 to 3 suitable fund as per my investment goal and that will not overlap my portfolio. I initially have thought to invest 70% in balance fund and 30% in equity diversified fund.
Please recommend fund names and your view point regarding this. Please let me know any other information you may require.
For your further information I have unknowingly invested in few NFO MF in 2008 on dividend pay-out scheme. Name of the fund are furnished below.
1. HDFC Infrastructure Fund – Div ₹5000/-
2. ICICI Prudential Focused Bluechip Equity Fund- Div ₹5000/-
3. Change to Reliance Vision Fund Div previously holding reliance natural resource Fund –Div ₹5000/- on date of purchase.
4. Change to Sundaram Growth Fund Div previously holding Sundaram Capex opportunities fund-Div ₹5000/- on date of purchase.
5. Change to Sundaram Infrastructure Advantage Fund – Div previously holding Sundaram India leadership fund –Div ₹5000/- on date of purchase.
Above mention equity based fund I am holding till date. What is your recommendation?
Thanks again, keep up your good work.
Dear Abhishek,
Existing funds : Kindly redeem all of them . ICICI bluechip fund is good one but kindly opt for 'growth' option.
Suggest you to read my artaicle on Top Equity funds and select one fund from equity diversified, balanced and mid-cap categories. Also, check out the percentage of overlap.
Go through this article : Kid's education goal planning.
Do you have sufficient life & health insurance cover?
Hi, Sreekanth,
Thanks for your prompt response and suggestion. I have gone through your article “Top Equity funds” for understand and selection of funds and visited Moneycontrol.com to compare portfolio holdings and percentage of overlap of selected three funds. Selected funds for SIP are stated below as per your suggested category.
1. Franklin India Prima Plus- Direct Plan (G) from Diversified/Multicap category ₹1000/- monthly
2. Franklin India smaller companies Fund - Direct Plan (G) from Midcap category ₹1000/- monthly
3. TATA Balanced -Direct Plan (G) from Balanced category ₹1000/- monthly
What is your suggestion regarding this if you have any other thoughts please let me know.
I am bit confused to select between regular (G) plan and Direct Plan (G). I didn’t get any “Plan-A” option under TATA balance fund in moneycontrol.com.
Frankly speaking I don’t think that I have enough Insurance coverage. Having personal LIC endowment Plan of Sum assured ₹300000/-(Three Lacs).Two lacks health insurance for me and family and Approx. 15 lac accidental death employee group insurance coverage, both are company provided. I have gone through the article on term insurance. Please suggest one which would be ideal for me or any suitable insurance plan which would cover me along with my family (wife & child).
Thanks in advance.
Dear Abhishek,
All the three funds are fine.
You can opt for any one of the mentioned Term plans.
After purchasing a term plan, you may discontinue your LIC plan and divert this money to mutual funds based on your financial goals.
Kindly read my articles;
Term insurance Vs endowment plans
How to get rid of bad insurance plan?
Hi Shreekanth,
Thanks for sharing such valuable informations. To be frank, previously I do not used to be investment savvy guy but kindled theinterest after reading your articles regularly. Lately, I invested in 4 different SIPs and 1 equity based ULIP. Till now I was in an impression that I am really diversified in my investment but after going through your this article, I have to reconsider the investments. I will really appreciate if you can suggest:
1. Can I change the MF/SIP at any point of time?
2. Will it affect my returns?
Waiting for your valuable suggestions in my mail.
Thanks and Regards
Subhankar Chatterjee
Dear Subhankar,
1 & 2- What do you mean by change exactly? (amount or fund or SIP date??)
What is the name of the ULIP plan?
Thank you for your appreciation.
Please share your suggestion in selecting ICIC Pru Value discovry , bsl front line eq, bsl mnc fund for 5-10 yrs wealth generation in sip
Dear Archana..Why did you shortlist these three funds? Kindly share your views.
Go through this article : Top Equity funds.