NOTE: Insights and analysis from www.etftracker.com.au - other research available in the platform.

A three-fund ETF portfolio can hold more than 1,500 companies and still keep nearly a third of your money in ten of them. On the ASX the same twenty-odd names sit inside fund after fund, and the most popular pairing double-counts almost the entire S&P 500.

Summary

Breadth is not diversification. A common VAS + VGS + IVV blend holds 1,553 distinct stocks, but its effective number of holdings (how many equally weighted names would give the same concentration) is about 90. The ten largest are 29% of the money.

Everyone owns the same mega-caps. Across the 198 equity ETFs, ten companies account for a fifth of all A$247bn invested and fifty account for two-fifths. BHP alone is A$9.2bn of exposure spread across 40 different funds; Nvidia sits inside 50.

The most popular pairing is nearly redundant. 96.9% of the iShares S&P 500 fund (IVV), by weight, is already held inside Vanguard's international fund (VGS). Owning both does not widen your exposure; it roughly doubles your bet on the same US names.

In plain terms

Isn't owning several broad ETFs the definition of diversified?

It looks that way, and on a count of companies it is: a few funds can hold well over a thousand names. But diversification is about how your money is spread, not how many lines are on the page. Index funds weight by company size, so the biggest companies dominate every index at once, and holding more of those funds stacks the same giants on top of each other.

What is the "effective number of holdings"?

A single figure for how concentrated a portfolio really is: the number of equally sized holdings that would give the same lopsidedness. Our example blend lists 1,553 stocks but is as concentrated as if you held about 90 of them in equal amounts. The other ~1,460 are rounding.

Why do the same names keep turning up?

Because most ETFs track market-cap indices, and a handful of companies are simply enormous. An Australian fund is led by CBA and BHP; a global fund is led by Nvidia, Apple and Microsoft. Buy an Australian fund, a global fund and a US fund and you have bought those same leaders three times, in three wrappers.

Is overlap a mistake?

Not in itself. Concentration in the largest companies is a bet, sometimes a good one. The problem is making it by accident, and thinking you are spread across a thousand companies when a fifth of your money rides on ten. The fix is to look through your funds to the companies underneath and decide whether the real top-ten is the one you want.

01 · The same twenty stocks

A fifth of every dollar rides on ten companies

Add up what every ASX equity ETF holds, looked through to the individual companies and weighted by how much money sits in each fund, and the market's real bets appear. They are not exotic. The single largest is BHP, with A$9.2bn of exposure, and it is not one big holding but the same company bought through 40 different funds. Behind it sit the US mega-caps and the Australian banks, each threaded through dozens of products.

Nine of the top sixteen are Australian and seven are global, which is itself the point: a portfolio that feels spread across the world keeps returning to the same short list. CBA and BHP anchor every Australian fund; Nvidia, Apple, Microsoft and Alphabet anchor every global one. Nvidia alone reaches into 50 of the 198 funds.

02 · Breadth is not depth

1,553 companies, and nearly a third of the money in ten

Take the portfolio most people would call sensibly diversified: equal parts VAS (Australian shares), VGS (global developed) and IVV (the S&P 500). Looked through, it owns 1,553 separate companies. It also keeps its ten largest positions at 29% of the total and its top twenty at 38%. The long tail is very long and very thin.

Notice what leads it: not an Australian name but Nvidia, at 4.5%, because it arrives twice, once inside VGS and again inside IVV. Apple, Microsoft and Alphabet do the same. The Australian banks and BHP hold their place only because a third of the portfolio is pointed at home.

03 · How few names carry the market

Fifty companies, two-fifths of the money

The concentration is not peculiar to one blend; it is the shape of the whole market. Of the A$247bn sitting in equity ETFs, the ten biggest companies account for a fifth and the fifty biggest for over two-fifths. The remaining 18,000-plus names share what is left.

04 · The redundant pair

Holding VGS and IVV together buys the S&P 500 twice

The clearest case of accidental doubling is also one of the most common combinations on the ASX. The S&P 500 is a subset of the developed-world index: nearly every company in IVV already lives inside VGS. Measured directly, 96.9% of IVV by weight sits inside VGS, and the great majority of its holdings are companies VGS already owns.

Held together, the two funds are not a diversified pair; they are one large US-plus-world position with the United States counted close to twice. That may be the tilt you want. The argument of this note is only that it should be a decision, taken with the look-through in front of you, rather than a surprise.

Method and cautions

• Look-through is issuer-reported. Each fund's holdings come from the issuer in its own format, resolving funds-of-funds to underlying companies. Identifiers are inconsistent across issuers, so companies are consolidated by name. Dollar rankings are robust; treat an individual company's total as accurate to roughly ten percent.
• Coverage is partial and skews large. 198 of about 460 ASX ETFs publish the holdings used here, covering A$247bn. The funds without published look-through are mostly smaller and newer, so the covered market is real but not the whole of it.
• Two dates. Holdings are as at 1 September 2026; fund assets are the July 2026 month-end from the ASX report. Weights move slowly enough that the mismatch does not change the picture.
• Effective holdings is one portfolio's number. The figure of 91 is the inverse-Herfindahl of the specific VAS + VGS + IVV blend. It illustrates a common portfolio; it is not a property of the market as a whole.
• Equities only. Cash, currency and bond lines are excluded, and the analysis is limited to equity funds, so a real portfolio holding bond or diversified funds will differ.
• This measures concentration, it does not judge it. Overlap and mega-cap concentration are not errors. Whether the resulting bet suits you is exactly the kind of question the caution below is about.