New Delhi, Sept. 3 -- Buying multiple mutual funds does not necessarily mean a portfolio is well diversified. An investor may hold three, four or even more equity schemes from different fund houses, yet find that many of them own the same companies. This duplication is known as portfolio overlap.

For instance, an investor holding two large-cap funds may find that both have substantial allocations to the same banking, IT or pharmaceutical stocks. While the schemes are different, their underlying portfolios may be quite similar, resulting in greater concentration than the investor may realise.

Debasish Mohanty, managing director and chief strategy officer at The Wealth Company Mutual Fund, said portfolio overlap is particularly relevant f...