Ten funds can still be one bet
Holding more funds is not the same as being diversified. Why overlap happens, how to spot it in what you already own, and what actually spreads a portfolio.
People often tell me how many funds they hold, as if the count were the answer. Eight. Twelve. One gentleman had twenty-three.
The count tells you almost nothing. Ten funds that hold the same thirty companies are one bet wearing ten names, and you are paying ten times to make it. This page explains how that happens and how to look at what you already own. It names no scheme and tells you nothing to buy.
How ten funds become one
The same companies
Every equity fund in India is fishing in one pond. There are only so many large listed companies, and a fund that must stay in the largest ones has a short list to choose from.
So two funds run by different houses, with different names and different managers, can hold many of the same companies, in roughly the same order. Both are doing their job. Neither is at fault. But if you hold both, you own the same shares twice.
This is strongest at the large end and loosens as you go smaller, because the pool of smaller companies is much wider.
The same style
Beyond the shares themselves, funds share habits. Several managers trained in the same tradition will reach for the same kind of company: the steady compounders, or the cheap and unloved, or the fast growers.
When that style is out of favour, every fund that follows it struggles at the same time. You feel it as “everything is down at once”, and conclude the market is against you. Often the market is fine and your portfolio simply has one opinion repeated several times.
The same decision-maker
Sometimes it is the same hand. One manager may run several schemes, or a house may have a single research desk feeding every fund it offers. Different product names, one set of judgements underneath.
Why people end up here
Rarely by deciding to. It accumulates.
How a long fund list builds up
- Something new is doing well. It gets written about, a colleague mentions it, and it goes into the portfolio alongside what is already there.
- Nothing ever leaves. Selling means a decision, possibly a tax event, and admitting something was a mistake. Easier to add and leave the rest alone.
- Each one looks sensible on its own. Nobody evaluates the ninth fund against the other eight. They evaluate it against nothing.
- The list becomes the portfolio. It was never designed. It is a record of what caught the eye, in order.
I see this constantly, and almost never with somebody who was careless. It happens to diligent people, because every individual step was reasonable.
What overlap actually costs you
It is not usually that you lose money. It is that you took concentrated risk while believing you had spread it.
You hold fifteen funds, so you feel protected. In a fall, everything moves together, and the protection was never there. Nothing broke. It was just never built.
Three smaller costs come with it:
- Every fund has its own folio, statement, nomination and paperwork. Fifteen of those is a real burden on whoever eventually has to sort it out.
- Rebalancing becomes guesswork, because you cannot see what you are actually exposed to.
- Reviewing fifteen funds properly is more work than anyone does, so most of them go unexamined for years.
How to look at what you already own
You can do this yourself. The information is public and free.
A sensible afternoon's work
- List what you hold. Pull your consolidated account statement so the whole lot is on one page, across every fund house.
- Write the category next to each one. Not the fund name — the category. Two in the same category is a flag worth examining.
- Open the latest monthly disclosure for each. Every fund publishes its full holdings. Compare the top ten of each against the others.
- Count how many times the same company appears. If one company shows up in six of your funds, you have a position in that company, not six funds.
- Ask what each one is for. If you cannot say what a fund does that the others do not, that is the honest answer about whether it belongs.
Nothing here requires a subscription, and nothing here requires me.
If you cannot say what a fund is doing that the others are not, you have not found a reason to own it yet.
What actually spreads a portfolio
Different ground, not more names.
Funds genuinely differ when they are fishing in different ponds: company size, a different asset class altogether, or a different country’s market. Those move at different times for different reasons, which is the entire point.
What does not spread a portfolio is a fourth fund of a kind you already own three of, however well regarded it is.
This is also why, when I build a list, I pick across fund houses rather than taking several from one. Not because any house is better, but because two funds from the same desk often share more than the name suggests.
The question worth asking is not “how many funds do I have?” It is “how many different things do I actually own?” Those are rarely the same number, and the second one is usually smaller than people expect.
What this does not mean
It does not mean a long list must be cut down. Selling has consequences — exit loads, capital gains, sometimes a lock-in — and a tidier portfolio is not worth paying a tax bill to get, by itself.
It does not mean a small number of funds is automatically correct either. Four funds that are all the same thing is the same problem with less paperwork.
And it is not a view on any scheme. What suits you depends on your goals, your timeframe and how much movement you can tolerate, none of which I know about you from a web page.
Where to check things for yourself
A reasonable next step is not a purchase or a sale. Pull your statement, write the category beside each holding, and see how many distinct things are actually on the list. Most people find the number is smaller than the count of funds, and that on its own is worth knowing.