ETF Overlap Explained: Why It Matters for Australian Investors (2026)

ETF overlap is the percentage of holdings two funds share in common, weighted by position size. Holding two heavily overlapping ETFs (such as VAS and A200, which overlap by approximately 94%) reduces diversification without reducing cost, because you effectively pay two management fees for much of the same underlying exposure.

ETF overlap is the percentage of holdings two ETFs share in common, weighted by position size. When two ETFs have high overlap (such as VAS and A200 at approximately 94%) investors holding both are paying double fees for largely the same underlying stocks. Understanding overlap helps avoid unintentional concentration.

Most Australian ETF investors hold more than one fund. Spreading money across multiple funds can reduce concentration in any single company, sector or country.

But there is a catch. Holding two ETFs is not the same as being diversified across two different sets of stocks. If both funds track the same index, or the same market, you may be paying two sets of fees for one effectively identical portfolio.

That is the ETF overlap problem.

What is ETF overlap?

ETF overlap is the percentage of stocks that two funds share in common. If VAS holds CBA as its largest position and A200 also holds CBA as its largest position, that holding is overlapping. The higher the overlap percentage, the more the two funds are doing the same job.

ETFLens calculates overlap based on the proportion of the smaller fund's holdings that are also present in the larger fund. So if you held $10,000 in VAS and $10,000 in A200, and their overlap is approximately 94%, roughly $9,400 of your A200 position is in the same stocks as your VAS position.

You are not getting $20,000 worth of diversification. You are getting something closer to $11,400.

Why does ETF overlap happen?

It happens because many widely held ASX ETFs track similar or identical indices. VAS tracks the S&P/ASX 300. A200 tracks the Solactive Australia 200. Both indices cover Australia's largest companies by market capitalisation. The top 200 stocks are almost entirely the same: CBA, BHP, CSL, Westpac, NAB, ANZ, Wesfarmers and so on. See the VAS vs A200 comparison for the live holdings overlap.

The same pattern applies in global markets. VGS tracks the MSCI World ex Australia index. BGBL tracks the Solactive Global Equity Large and Mid Cap Paris Aligned index. Both give you exposure to large companies across the US, Europe, Japan and other developed markets. Their top holdings (Apple, Microsoft, NVIDIA, Amazon) are largely identical.

The funds have different names, different providers, and different product disclosure statements. But underneath, they largely own the same stocks.

A concrete example of duplicate ETF holdings

Take a common portfolio: $10,000 in VAS and $10,000 in A200.

VAS charges 0.07% p.a. in management fees, which works out to $7/yr per $10,000. A200 charges 0.04% p.a., which works out to $4/yr per $10,000.

Now consider that approximately 94% of your A200 position is in stocks you already hold through VAS. On a $10,000 holding, that is roughly $9,400 in duplicate exposure. The portion of A200 that is genuinely adding new diversification is only around $600. You are paying fees on the full $10,000 for $600 worth of exposure that is not already in your portfolio.

Over 20 or 30 years, that fee duplication compounds. It is a cost with no corresponding diversification benefit.

High-overlap ASX ETF pairs

These are the most commonly held ETF pairs in Australia with significant holdings overlap:

• VAS and A200: approximately 94% overlap. Both track Australian large-cap companies on near-identical indices. See VAS vs A200: Index, Holdings and Fees for the full breakdown.
• VGS and BGBL: high overlap. Both track global developed markets. BGBL charges 0.08% p.a. compared to VGS at 0.18% p.a., a meaningful fee difference for near-identical exposure. See VGS vs BGBL: Which Global ETF is Cheaper? for the full breakdown.
• NDQ and VGS: moderate overlap. NDQ is concentrated in US technology, which already makes up a large portion of VGS. Holding both increases the weighting toward US tech significantly.
• VDHG and VAS: VDHG already contains an Australian shares allocation as one of its underlying funds. Adding a standalone VAS position increases the Australian weighting beyond what VDHG's asset allocation provides. The VDHG vs DHHF comparison covers VDHG's underlying allocation in detail.

When ETF overlap is not a problem

Some overlap is unavoidable. A broad Australian ETF and a broad global ETF will share some large multinationals that are cross-listed or widely held internationally. That level of incidental overlap is a normal feature of diversified portfolios.

The issue is unintended duplication: holding two funds that are doing the same job because the names or providers are different, or because an investor assumed that holding more ETFs automatically means more diversification.

Some investors hold overlapping funds across different accounts during a transition period. Whether that arrangement is appropriate depends on individual circumstances, including tax position, brokerage costs and investment timeline.

How to check for ETF overlap in your Australian portfolio

The ETFLens ETF overlap checker lets you enter any two ASX ETF tickers and see their overlap percentage, shared top holdings, and the estimated dollar value of the duplication based on how much you have invested in each fund.

For a view across your whole Australian ETF portfolio at once, including combined sector exposure, geographic breakdown and total annual fee cost, the Pro Portfolio Builder adds all your ETFs together and shows you exactly what you actually own.

Not financial advice.