Mutual Fund Overlap: The Hidden Risk Most Investors Ignore
Mutual Fund Overlap: The Hidden Risk Most Investors Ignore Published on Financial Friend | CAS Analyser Guide The Dangerous Illusion of Being Well-Diversified Imagine you have five mutual funds in your portfolio. Five. You feel safe. You feel covered. You tell yourself: “If one fund fails, the others will carry me.” But here’s a question nobody asks: What if all five funds are secretly investing in the same 10 stocks? This is mutual fund overlap — and it is one of the most widespread, least-discussed portfolio mistakes made by Indian investors today. You may be holding a Flexi Cap fund, a Large Cap fund, a Multi Cap fund, a Bluechip fund, and an Index fund — and still have 60% of your money riding on the exact same companies: Reliance, HDFC Bank, Infosys, ICICI Bank, and TCS. More funds does not mean more diversification. It can actually mean concentrated risk with extra steps. In this guide, we will break down exactly what mutual fund overlap is, why it is dangerous, how ...