ETFs · Diversification
How many ETFs do you actually need?
A common beginner instinct is that more funds means more safety. So people end up holding eight or ten ETFs, feeling well spread out. Often they're not — they're just paying more fees to own the same companies several times over.
Overlap is the hidden trap
Many popular funds hold the same giant companies. Buy an Australian fund, a 'top 200' fund and a dividend fund, and you may own the big banks three times. That's not diversification — it's concentration wearing three different labels.
A simple, robust shape
- One broad Australian fund and one broad global fund already covers thousands of companies.
- Add a third only if it gives you something genuinely different — not more of what you have.
- Before buying any new fund, ask: does this add a new exposure, or just repeat an old one?
Diversification is about owning different things, not owning more things.
A short, deliberate list you understand will almost always serve you better than a long one you can't see through. Fewer, broader, and different beats many, narrow, and overlapping.
See it on your own portfolio
Find out which of these forces your ASX portfolio is most exposed to — in 60 seconds.
Keep reading
What is an ETF, in plain English?
ETFs are how most Australians now start investing. Here's the plain-English version of what they are, why people like them, and what to watch.
How to think about choosing your first ETF
Everyone wants to be told the one ETF to buy. A more useful question is what you want it to do for you. Here's a simple way to decide.
PortLens provides general information only — not personal financial advice. Examples are illustrative. Always do your own research or speak with a licensed adviser before making investment decisions.
New to a term used here? See the plain-English glossary.