Checking ETF Overlap in Your Portfolio — How to Expose Concentration Risk
Three ETFs in your portfolio does not mean threefold diversification. If you invest in an MSCI World, an S&P 500 and a Nasdaq ETF in parallel, you hold Apple, Microsoft and Nvidia three times — and instead of broad diversification you have leveraged US tech exposure. An overlap analysis makes exactly these hidden duplications visible.
The good news: you do not have to line up factsheets side by side. A look-through analysis breaks every ETF down into its individual holdings and shows at the push of a button how concentrated your portfolio really is.
Why ETF overlap is your real risk
Overlap arises wherever indices slice the same market: the S&P 500 is largely contained in the MSCI World (~70% US share), the Nasdaq 100 almost entirely in the S&P 500, and world indices overlap each other by well over 80% — the details are in the MSCI World vs. S&P 500 comparison.
A worked example: you hold €50,000 each in an MSCI World and an S&P 500 ETF. It feels like two funds, broadly diversified. In reality, around €85,000 of your €100,000 portfolio sits in US equities, and the ten largest positions — mostly the same mega caps — account for a share far above that of a single world index. That is not a diversified portfolio but concentration risk in camouflage: in the next US tech correction, all building blocks fall at the same time.
Concentration risks, ETF overlap and look-through analysis – free with MoneyPeak.
How to check overlap methodically
A robust overlap analysis works at holdings level, not index level. The process:
- Look-through: every ETF is resolved into its individual holdings with weights.
- Aggregation: identical stocks are summed across all funds and single positions — only then do you see your true weight in Apple or Nvidia.
- Dimensions: beyond single stocks, country and sector weights count. 40% tech spread across three funds is the same risk as 40% tech in one fund.
Rules of thumb: if the shared portion of two ETFs exceeds roughly 50%, they effectively serve the same function in the portfolio — one of them is redundant. Single positions above about 5% portfolio weight and top-10 shares well above those of a world index are checkpoints, not automatic sell signals: what matters is whether the concentration is intentional.
From finding to action — without the tax trap
The MoneyPeak portfolio analysis does the legwork for you: connect your broker or import positions, and the look-through analysis shows aggregated stock, country and sector weights across all ETFs — including the overlap between your funds. What would take hours of factsheet work by hand is done in minutes.
When cleaning up: do not sell reflexively. A sale realizes gains subject to the German flat tax of effectively 26.375% (after the 30% partial exemption for equity ETFs) — and under FIFO, the oldest, usually highest-gain units are sold first. Often it is enough to simply stop contributing to the redundant ETF and direct future contributions into the building block that actually fills the gap in your portfolio.
Frequently asked questions
When does ETF overlap become a problem?
There is no official threshold. As a rule of thumb: if two ETFs overlap by more than roughly 50%, they serve practically the same function in the portfolio. What matters is whether the resulting concentration is intentional.
How do I actually check the overlap of my ETFs?
Via look-through analysis: all ETFs are broken down into their individual holdings and identical stocks are aggregated. The MoneyPeak portfolio analysis does this automatically for the entire portfolio, including country and sector weights.
Should I sell a redundant ETF?
Not reflexively: a sale triggers German capital gains tax on the profits, under FIFO starting with the oldest units. Often it is enough to stop the savings plan and redirect future contributions.
Concentration risks, ETF overlap and look-through analysis – free with MoneyPeak.