As Indian regulators tighten rules on mutual fund overlap, investors are turning to advanced tools that measure true portfolio diversification, with methodology becoming key to assessing risk and compliance.
Mutual fund overlap measures how much two or more schemes own in common, and that makes it a useful check for investors who think they are diversified but may, in practice, be holding the same underlying bets more than once. The best calculator depends on what you are trying to assess: a pair of funds, a broader portfolio or, in some cases, holdings within the same asset management company.
For a simple two-fund comparison, AdvisorKhoj and Morningstar India are among the better-known options. AdvisorKhoj focuses on common holdings and the degree of duplication between two schemes, while Morningstar India offers side-by-side fund comparison with holdings and sector allocation data that can help investors see where portfolios converge. Dezerv also provides a portfolio overlap tool with clear bands ranging from no overlap to extreme overlap, and Rupeezy’s MF Lab extends the comparison to two or more funds.
The key point is that methodology matters. The most meaningful tools use weight-based overlap, which adds up the lower weight of each stock that appears in both funds. That approach is more accurate than simply counting shared names, because a 1% holding should not be treated the same as a 10% holding. In practice, that means a portfolio with many common stocks can still have modest overlap if those stocks are held in small amounts.
For investors looking at an entire portfolio rather than just two schemes, Fisdom and Value Research are more suitable because they can show how all the holdings fit together. That broader view is often more revealing than pairwise checks, especially when several funds are being held for the same goal. Kuvera says portfolio-level monitoring can also help investors track allocation, discipline and performance across accounts.
The overlap number itself still needs interpretation. The article’s guidance suggests that 0% to 20% is very low, 20% to 30% is generally healthy, 30% to 40% is getting high and anything above 50% leaves little diversification benefit. Financial advisers commonly recommend keeping overlap below 30% where possible. The issue has also become more important after the Securities and Exchange Board of India introduced a mandatory 50% portfolio overlap ceiling for certain fund categories in February 2026, with asset managers required to publish monthly category-wise overlap disclosures and calculate overlap quarterly using average daily values.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
