News From Press How overlapping mutual funds reduce your returns and what to do about it

How overlapping mutual funds reduce your returns and what to do about it

Source: Moneycontrol Apr 11, 2025

Mutual fund overlap occurs when two or more funds in your portfolio invest in the same or similar underlying stocks or sectors. While many investors believe that owning multiple mutual funds ensures diversification, overlapping funds can lead to an over-concentration in specific companies or industries, reducing the actual diversification benefit. This can increase risk and lead to portfolio inefficiencies, especially during market downturns when correlated assets fall together.

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