The question
I hold three different funds with more than 600 holdings between them. Could most of my money still be riding on a few companies?
The idea
- Beginner lesson 2 measured overlap by weight between two funds. With three or more funds, ask a sharper question: across everything I own, how much of my money sits in each company? That is your look-through weight.
- For one company, it adds up like this:
look-through weight = for each fund, (your share in that fund × the company's weight in it), added up
- Hidden concentration is a company that is modest in each fund but large in your total.
Worked example
The 4 steps beside the drawing at the top work this through on ETFIQ data. Point at a step to light the part of the drawing it describes.
Three Vanguard funds, all with holdings dated Sep 30, 2026:
| Fund | What it holds | Holdings | Top 10 share |
|---|---|---|---|
| VOO | S&P 500 | 505 | 39.1% |
| VUG | US growth companies | 135 | 63.1% |
| MGK | The largest growth companies | 52 | 64.5% |
- VOO and VUG: 58%
- VOO and MGK: 52%
- VUG and MGK: 87%
VUG and MGK are nearly one fund. For three funds, the overlap tool takes the smallest of the three weights for each security, then adds them up: 52.2% is held by all three.
(8.40% + 13.49% + 13.69%) ÷ 3 = 11.86% of your money
That is $1,186 in one company. In VOO alone, it would be $840.
| Company | VOO | VUG | MGK | Your look-through weight |
|---|---|---|---|---|
| NVIDIA | 8.40% | 13.49% | 13.69% | 11.86% |
| Apple | 7.39% | 12.51% | 12.53% | 10.81% |
| Microsoft | 5.79% | 9.75% | 9.46% | 8.33% |
| Top three | 21.6% | 35.7% | 35.7% | 31.0% |
Almost a third of the money rides on three companies. Adding two growth funds to VOO did not spread the money. It stacked it on the companies all three already favoured.
The common mistake
"Different fund names, different strategies, so I'm spread out." Growth funds and the S&P 500 can lead with the same handful of giant companies, as these three did. The labels differ; the top holdings don't.
A second mistake is stopping at pairs. Overlap between two funds says nothing about how your weights stack. Only the look-through weight tells you what one company's bad year would cost you.
Check your understanding
Pick an answer to see why. Two of three right passes the lesson.
Answer: C. 7%. 50% × 10% + 50% × 4% = 5% + 2% = 7%. Not A: adding the two weights ignores that each fund holds only half your money.Answer: D. 87% of their weight sits in the same securities. Overlap by weight counts money, not company names. Not A: a fund can share many small names and little money, or the reverse.Answer: B. The company's look-through weight across all your funds. It is the share of all your money in that company. Not D: one fund's weight misses what the other funds add.
Takeaways
- Work out your look-through weight in your five largest companies, across every fund you own.
- Pairwise overlap is the first check; the look-through total is the one that measures your risk.
- Add up share classes of one company, like GOOGL and GOOG, before you judge your spread.