🧠 3 ETFs, same top 10 holdings?

No one started with a perfect portfolio.
Everyone make mistakes. It's fine.

And the good thing about mistakes, once you are aware of them, is that you can correct them.

One common oversight new ETF investors might make : accidentally holding the same investments multiple times.

Let's talk about why this happens and how to spot it in your own portfolio.

Everything we're discussing here is meant to help you understand ETF portfolio structures and potential overlaps - not to tell you what to do with your specific investments. This newsletter isn’t personalized investment advice 🙂 

Everyone's financial situation, goals, risk tolerance, and time horizon are different.
The examples used in Michael's portfolio are used as illustrations to explain concepts.

Your actual portfolio decisions should be based on your unique circumstances, possibly with guidance from a qualified financial advisor.

The three indexes selected by Michael are different: FTSE All World, S&P 500 and Nasdaq 100.

Yet there's quite a significant overlap in what he’s actually buying.

Let's peek under the hood starting with geographic distribution:

Notice something interesting here?

When you look at the countries in each index, the U.S. dominates across all three.
In Michael's case, he thought he was diversifying, but his portfolio is heavily concentrated in just one country: the U.S.

This means that if the U.S. market catches a cold, his supposedly "diversified" portfolio might catch pneumonia.

But let's dig deeper into the sectors these ETFs are investing in:

Looking at the sectors we see that information technology has quite a heavy weigh in each of those indexes, varying from 31 to 61%.

Given these sector similarities, you might already suspect what we'll find when we look at the individual companies each index holds.

These three indexes share almost the exact same top 15 companies.

Surprised?

Michael is essentially paying three different fund managers to buy him the same top companies, just in slightly different proportions.

So what started as "I'm diversifying my risks" actually became "I'm paying extra fees to hold Apple, Nvidia, Microsoft, and more three times over."

Would it make sense to only pay it once in the proportions that fit your risk profile best? Maybe.

All we can say for sure is that redunduncy has real consequences:
1. You're paying more in fees for essentially the same exposure.
2. Your actual diversification is much lower than what you think it is.
3. Your risk management strategy might be weaker than you realize.

"So what? Is this really a problem worth solving?"

Every redundant ETF in your portfolio comes with its own expense ratio. 

Each fee might seem small (0.03% here, 0.2% there), but you're essentially paying multiple times for the same exposure. Over decades, these seemingly tiny fees can eat away thousands from your returns.

Another issue worth pointing out is false comfort. Redundancy creates an illusion of diversification that might lead you to underestimate your actual risk exposure.
You might think "I own three different funds, so I'm well-diversified" when in reality, you're heavily concentrated in the same handful of tech giants. Be careful.

The psychology behind our redundant portfolios

We're all susceptible to certain thinking patterns that create these redundant portfolios:

• We tend to accumulate ETFs over time, adding new ones that sound good without reviewing how they fit with what we already own.

• We're drawn to whatever has performed well recently (like U.S. tech stocks), leading us to unconsciously overweight these areas.

• There's a psychological comfort in owning multiple funds, even when they contain essentially the same underlying investments.

We all have these biases - it's human nature.
But awareness helps us set more intentional choices.

Conscious overlap vs. accidental duplication

Now, there's nothing wrong with saying, "I want extra exposure to growth companies in this sector" IF that's a deliberate strategy.

The bottom line is understand what you're actually buying.

If you want this weighting, fine! Just make sure it's an active decision, not an oversight.

Your ETF portfolio audit in 3 simple steps

Ready to see what's actually in your portfolio?
Here's how to check for redundancy:

1. List your ETFs and their expense ratios:
   Create a simple list with each fund you own.
   

2. Find the top 10 holdings of each:
   You can use Trackinsight.com (where the screenshots above are from) or JustETF.com.
   

3. Compare the geographic and sector breakdowns as well as the top holdings:
   Look for patterns and overlaps.

Have you discovered unexpected overlaps in your own portfolio?

Or have you intentionally built in some redundancy for specific reasons?

I'd love to hear about your experiences - reply to this email and let me know what you've found in your own ETF collection 🙂 

Take care,
Nessrine