SEBI's monthly portfolio-overlap reports are live — check if your mutual funds are duplicating each other

If you hold four or five equity mutual funds hoping for diversification, SEBI’s latest disclosure rule is worth a look. Following its February 26, 2026 circular on categorisation and rationalisation of mutual fund schemes, asset management companies (AMCs) have started publishing monthly, category-wise portfolio-overlap reports on their websites from August 2026.

What changed

• Overlap disclosure is now routine. Every AMC must show, scheme by scheme, how much of one fund’s portfolio duplicates another fund’s holdings within the same fund house.
• A hard cap for sectoral and thematic funds. SEBI has capped portfolio overlap at 50% — no sectoral or thematic equity scheme can share more than half its portfolio with another equity scheme run by the same AMC. Large-cap funds are exempt from this cap, since they naturally hold similar index-heavy stocks.
• Phased realignment. AMCs that breach the cap get up to three years to realign portfolios, depending on the scheme category, rather than an immediate forced rebalancing.
• “True-to-label” renaming. As part of the same overhaul, fund houses have roughly six months from the February circular — landing around August 2026 — to rename schemes so their names accurately reflect what they actually invest in, and to drop names that oversell return potential.

Why this matters for your portfolio

Many retail investors add a new fund every time they get a recommendation, assuming more funds means more diversification. In practice, two “different” funds from the same AMC — say a large-cap fund and a flexicap fund — can hold many of the same top stocks. You end up paying two sets of expense ratios for what is largely one portfolio.

With overlap data now published monthly, you can actually check this before adding a new scheme:

1. Before buying a new sectoral, thematic, or flexicap fund, look up the AMC’s published overlap report.
2. If your existing fund and the new one show overlap above roughly 50-60%, the new fund is unlikely to add real diversification.
3. Prefer funds across different AMCs or genuinely different mandates (e.g., a debt fund or an international fund) if your goal is spreading risk, not just adding SIPs.

The bigger picture

This overlap rule sits alongside other 2026 SEBI mutual fund reforms already in effect since April 1 — including a revised total-cost structure and a freeze on fresh investments into some retirement- and children’s-labelled funds pending recategorisation. Together, the changes push the industry toward funds that do what their name and category claim, and give investors the data to verify it themselves instead of relying on distributor pitches.

If you’re building or reviewing a SIP portfolio, use the SIP calculator to model returns once you’ve trimmed overlapping schemes, and the mutual fund calculator to compare lumpsum versus SIP outcomes for any new fund you’re considering.

Sources: SEBI circular on categorisation and rationalisation of mutual fund schemes (dated February 26, 2026); reporting from Value Research Online and TaxGuru on the 50% portfolio-overlap cap and monthly disclosure requirement.