PMS Portfolio Overlap: Are Your Strategies Really Diversified?

Most investors add a second PMS for a sensible reason: one manager and one style feels like too much riding on a single set of decisions. The assumption behind the move is that two managers will own different things.

Often they do not, at least not entirely. Good companies are a limited set, and managers who screen for earnings growth, clean balance sheets and reasonable liquidity tend to arrive at some of the same names. A senior PMS executive at one of India's largest asset managers said as much in a television interview in August 2026: some schemes may have overlapping holdings, and what separates them is philosophy, stock selection and market-cap focus.

That is where PMS portfolio overlap becomes a practical question. If your two strategies share a third of their weight, you do not own two independent portfolios. You own roughly one and a half, and you pay two managers for it.

The stakes are higher than with mutual funds. The minimum ticket is ₹50 lakh per manager under the current regulations, PMS portfolios usually hold far fewer stocks than a diversified fund, so each of the common holdings carries real weight, and the shares sit in your own demat account next to the mutual funds and direct stocks you already own.

The idea that a portfolio's risk depends on how its holdings behave together goes back to Harry Markowitz, who introduced modern portfolio theory in a 1952 paper. Adding an asset reduces risk only to the extent that it moves differently from what you already own. Counting holdings tells you nothing by itself.

Half a century later, the active share study, carried out at the Yale School of Management in 2006 by Martijn Cremers and Antti Petajisto, measured the fraction of a fund's portfolio that differs from its benchmark. Zero is an index fund; 100% means nothing in common with the benchmark. Its most quoted finding was that about one-third of actively managed funds were closet indexers.

Portfolio overlap between two managers is the same arithmetic pointed elsewhere. Active share compares a fund with an index; portfolio overlap compares one portfolio with another.

In India the measure entered regulation through mutual funds. A SEBI circular of 5 June 2018 requires fund houses to publish each scheme's month-end portfolio, with ISINs, on their own website and on AMFI's within 10 days of the month closing.

Then, on 26 February 2026, SEBI's circular on categorisation of mutual fund schemes wrote a portfolio overlap calculation into the rulebook. It caps the figure at 50% between a fund house's value and contra funds, and between a sectoral or thematic scheme and that fund house's other equity schemes except large cap. Fund houses must also publish category-wise portfolio overlap levels on their websites every month.

Portfolio managers followed a different path. The SEBI (Portfolio Managers) Regulations, 2020 treat holdings as something a manager reports to the client, not to the public, which is why overlap between PMS strategies is harder to check.

SEBI's report of portfolio managers as on 31 July 2026 records 514 portfolio managers submitting data and 2,13,204 discretionary clients, none of whom can look up another strategy's full portfolio on a public website.

The standard measure is often called the common-holdings or minimum-weight method. It has three steps.

1. Write down each stock's weight in each portfolio, as a percentage of that portfolio's value.
2. Keep only the stocks that appear in both. These are the common holdings.
3. For each common stock, take the lower of the two weights. Add those lower weights together.

The total is the overlap percentage: the share of each portfolio that is matched, rupee for rupee, by the same stock in the other.

This is the method SEBI set out for mutual funds in Annexure A of its February 2026 circular: weights at the level of individual ISINs, zero for stocks held by only one scheme, and the minimum weight of each common stock summed. SEBI's own illustration works out to 45%. The circular does not apply to portfolio managers, but the arithmetic works for any two portfolios.

Why the lower weight? If one strategy holds a bank at 9% and the other at 7%, only 7% of each portfolio is truly duplicated. The extra 2% is a difference between them.

The table below uses two invented portfolios: Strategy A, a 20-stock flexi-cap approach, and Strategy B, a 25-stock large-and-mid-cap approach. The names and weights are made up to show the method and do not describe any real PMS.

The overlap percentage is 27%. The six common holdings make up 34% of Strategy A and 33% of Strategy B, and 27 percentage points of each are matched exactly by the other.

Now put money on it. With ₹1 crore in each strategy, ₹27 lakh of each account buys exposure you already have in the other. Across both, Private bank 1 is 8% of your PMS money and Private bank 2 is 7%. Neither manager's statement will tell you that 15% of your combined PMS capital sits in two banks.

The minimum-weight number is the most useful single figure, but three other checks are worth a few minutes.

Stock count. Six stocks are shared: 30% of Strategy A's 20 names and 24% of Strategy B's 25. The weakness is that a shared stock at 1% counts the same as one at 9%.

Sector overlap. Two strategies can own different banks and still carry the same bet on lending growth. Apply the lower-weight rule to sector weights as well. A pair with 15% stock-level overlap and 70% sector overlap is less diversified than the first figure suggests.

Return correlation. When you cannot get holdings, monthly returns are a rough substitute. Two strategies whose returns have moved closely together for years are probably exposed to similar things. It is backward-looking, so treat it as a clue.

No regulation limits PMS overlap for an investor, or caps what two portfolio managers may hold in common. SEBI's 50% figure applies only to specified mutual fund categories inside one fund house.

The bands on retail fund tools are conventions, and they disagree. One platform calls anything over 50% very high and says advisers often suggest staying near 30%; another treats everything from 20% to 60% as moderate.

For PMS, read the number with three questions.

• What are the common holdings? Index heavyweights are cheap to own through an index fund. A small-cap name both managers hold raises a liquidity question if both sell together.
• What is left? At 27%, most of each portfolio is different. At 55%, the second manager adds less than half a portfolio of new exposure for a full fee.
• Is it stable? A high portfolio overlap across several quarterly statements reflects similar thinking. One quarter may be coincidence.

As a working rule of thumb, and it is our judgement, not a standard: under about 20% the two strategies are doing mostly different things; between 20% and 40% you should be able to explain why you want both; above 40%, ask whether the second manager is earning the fee.

Every mutual fund scheme's complete portfolio is public. Under SEBI's June 2018 circular the month-end holdings go up on the fund house's website and AMFI's within 10 days, and since February 2026 fund houses must also publish category-wise portfolio overlap levels monthly. Anyone can compute portfolio overlap between two schemes without investing in either.

The PMS rules point the disclosure at the client. Regulation 31 of the SEBI (Portfolio Managers) Regulations, 2020, as amended up to 3 September 2025, requires the manager to furnish a report as agreed in the contract, at intervals not exceeding three months, and whenever the client asks. The report must contain the composition and value of the portfolio, a description of the securities, the number held and the value of each one.

SEBI's Master Circular for Portfolio Managers dated 16 July 2025 fixes the format. The quarterly account statement in Annexure 5D includes a holding report as of quarter end, listing each security with quantity, average cost, market value and its percentage of the portfolio. That last column is exactly what the calculation needs.

So for a PMS you already own, the data is good.

What the rules do not do is make a strategy's portfolio public. Portfolio managers file monthly reports with SEBI within seven working days of month end, and with the industry body APMI, which hosts them for comparison; these cover assets and performance. SEBI's published monthly report is aggregated by asset class and has no stock-level holdings. We read the regulations and the master circular and found no provision requiring a manager to publish the holdings of an investment approach.

There is a second complication. A mutual fund has one portfolio and every unitholder owns a slice of it. A PMS has as many portfolios as clients, each built on the dates the money arrived and subject to any restrictions the client set.

SEBI recognises this in a disclaimer the master circular requires alongside performance: a client's results may vary from other investors' because of the timing of inflows and outflows and because of differences in the portfolio composition due to restrictions and other constraints.

So the factsheet for a strategy and the holdings in a new client's account can differ, especially in the first months. The factsheet is evidence about the manager's thinking. Your statement is evidence about your money.

SEBI's Board approved new SEBI (Portfolio Managers) Regulations, 2026 on 24 September 2026 to replace the 2020 regulations. As of 7 October 2026 we found no Gazette notification, so the 2020 regulations and the July 2025 master circular remain the rules in force.

The Board's press release lists wider investment flexibility and a new Portfolio Managers Route for Investing in Mutual Fund units, called PRIM, with a minimum ticket of ₹25 lakh. It announces no public disclosure of strategy holdings.

PRIM matters here in one way. A PRIM portfolio holds mutual fund units, not individual shares, so any duplication with an equity PMS sits one layer down, inside the funds.

Before you invest, what you can usually get is a factsheet or presentation: the top holdings, often ten, sector weights, a market-cap split and the number of stocks, as of a stated date. These are marketing documents prepared by the manager. They are useful, and incomplete.

Run the earlier example as if only top-10 lists were available. Suppose Strategy A's ten largest positions include both banks, the IT company and the capital goods company, but not the telecom company at 4% or the auto maker at 3%. Suppose Strategy B's top ten include the other five shared stocks but not the capital goods company at 3%.

Only three stocks appear on both lists: the two banks and the IT company. The portfolio overlap you can compute is 7% + 6% + 4% = 17%. The true figure was 27%.

That gap always runs in one direction. A stock missing from one top-10 list may still be held at a smaller weight, so full data can add to the total and never subtract from it. A portfolio overlap figure built from top-10 lists is a floor, and the less of each portfolio the top ten cover, the further the truth can sit above it.

Three habits make partial data more honest.

• Check the dates. Compare lists from the same month. A June list against a September list measures two things at once.
• Note the coverage. If the top ten add up to 45% of a portfolio, more than half of it is invisible to you.
• State it as a range. "At least 17%, on top-10 data for a given month" is truthful. A bare "17%" is not.

For this article we looked for dated, public factsheets with weighted top-10 holdings for pairs of large PMS strategies, intending to compute an illustrative figure. What turned up was patchy: sector weights for some, stock counts for others, undated lists on third-party pages, and a 2021 news list far too old to describe today's portfolios.

We did not find two comparable, dated, weighted tables that would support a fair calculation, so this article gives no overlap percentage between any named strategies. Be cautious with any such figure you see quoted. Ask what date the holdings are from, whether they are full portfolios or top-10 lists, and which method was used.

The reliable sources, in order of quality: your own quarterly statements; a full model portfolio or recent sample holding statement that a manager shares on request; and dated factsheets, treated as a floor.

A pairwise overlap percentage tells you whether two products resemble each other. The question that matters for your wealth is how much of your total equity sits in each company once every product is opened up. That is look-through exposure.

PMS and mutual fund overlap is the most common blind spot. A flexi-cap fund and a multi-cap PMS can share their largest positions, and the fund's stake is invisible unless you open its monthly portfolio. Direct stocks add a third layer, often the heaviest, because investors hold large positions in companies they know well, and professional managers frequently favour the same ones.

Take the same hypothetical investor with ₹4 crore in equity. The figures are invented.

One company is 19.5% of this investor's equity, and no single statement says so. The PMS statements show 9% and 7%, the fund factsheet shows 8%, and the broker account shows a position that looked moderate against ₹4 crore. Only the sum reveals it.

The method: for each stock, multiply each product's share of your money by that product's weight in the stock, then add across products.

You do not have to assemble the list from scratch. The Consolidated Account Statement sent by the depositories is, in SEBI's words, a single combined statement showing an investor's transactions across all mutual funds and other securities held in demat accounts.

Because PMS shares are held in a demat account in your own name, they should appear there alongside your direct holdings. Confirm this against your own statement, since consolidation depends on the PAN and holding pattern of each account.

The statement lists mutual fund units, not the stocks inside them. For those you need each scheme's month-end portfolio from the fund house or AMFI's portfolio disclosure page. A spreadsheet with one row per company and one column per product finishes the job.

For mutual funds, tracking portfolio overlap is a solved problem: public monthly files feed free calculators on many platforms, and fund houses now publish their own category-wise levels. PMS has lagged because the inputs are private. That is changing at the edges.

Quarterly statements follow a standard format under the master circular, and software can now pull a holdings table out of a PDF in seconds. The consolidated statement gives one source for everything held in demat form. And AI-based research tools have started to read PMS statements, fund portfolios and stock lists together and report the common holdings across them.

The output is only as good as the input. A tool that reads a top-10 list cannot see the eleventh holding, and until a manager shares a full portfolio, any estimate for a strategy you do not yet own remains a floor.

• You learn what the second manager adds. A strategy with a 15% overlap percentage brings mostly new exposure. One at 50% brings half as much for the same fee.
• You see your real single-stock exposure. Your largest position may be one that no statement reports in full.
• You can avoid paying active fees twice. Where two managers share a block of index heavyweights, part of both fees buys the same exposure.
• You ask better questions. "Your top ten shares four names with a strategy I hold; where does the rest differ?" gets a more useful answer than "how are you different?"
• You choose complements on purpose. Real PMS diversification means pairing approaches that fish in different places, not buying two versions of one idea.
• You use a standard method. The minimum-weight calculation is the one SEBI adopted for mutual funds, so an adviser or manager can check your number.
• You catch drift. Repeating the check each quarter shows whether two strategies are converging on a popular theme.

Step 1: Build your own holdings list. Take the latest quarterly holding report from your existing PMS, your direct stocks and your mutual fund units, ideally from the same month.

Step 2: Open up the mutual funds. Download each equity scheme's month-end portfolio and convert every holding into rupees using the amount you have invested.

Step 3: Get the best data you can on the candidate. Ask the manager for the full current portfolio of the investment approach, or a recent sample holding statement, with its date. Some will share this with a serious prospective client. If all you get is a dated top-10 list, use it as a floor.

Step 4: Compute three numbers. The overlap percentage between the candidate and each PMS you hold; sector overlap by the same rule; and your look-through exposure to your five largest companies as it would stand after investing.

Step 5: Decide and write down why. If PMS overlap is low, the strategy adds something. If it is high, choose a different strategy, trim a fund or stock that duplicates it, or accept it knowingly. Record the figures and date, and repeat when each quarterly statement arrives.

The exercise takes an hour or two the first time and less afterwards, a small cost against a ₹50 lakh minimum.

The five steps above are doable on a spreadsheet. They are also tedious, which is why most investors never do them. This is the part of the job PMS Sahi Hai has built its process around: the firm's own description says your existing PMS, AIFs and funds are "examined for hidden overlaps, concentration and duplication risks" before a new strategy is suggested.

The work is done with Nyra, the platform's AI research tool. Here is what the site says it does, and where it stops.

• A whole-portfolio review. The Nyra page lists a portfolio review covering "Overlap, drift & fee drag across your holdings", and its explainer describes an "Honest Mirror" with overlap detection and sector-drift flags. That is the look-through view from earlier in this article, run by software.
• One intake for everything you own. The portfolio score page asks you to share "your PMS, AIF, MF or direct equity, a list, a statement, or just the names". The quarterly holding report and consolidated statement you gathered in Step 1 are the right inputs.
• A shortlist to test. The compare section tracks 900+ PMS, AIF and GIFT City offerings with filters for category and style, and lets you set up to four side by side. Strategy pages show the number of holdings, the market-cap mix and the cash buffer, which is enough to pick candidates that look different from what you hold.
• Sources you can check. Nyra's explainer says every claim links to a public document such as a SEBI filing or a manager's factsheet. For portfolio overlap that matters, because the date and completeness of the holdings decide how far to trust the number.

Three limits are worth stating. The site does not publish an overlap percentage between named strategies, and we found no public pairwise calculator on it. Strategy pages do not print a holdings table; they say top holdings and the sector book "stream from the live feed" and tell you to ask Nyra for the current portfolio. And the pages do not describe the method behind the overlap review, so ask which holdings date it used and whether it worked from full portfolios or top-10 lists. Then compare its answer with your own minimum-weight figure.

PMS Sahi Hai is an APMI-registered distributor, and Nyra describes itself as an analytical tool, not a SEBI-registered investment adviser. Its output is information to check and act on, not personalised advice. If you want to sharpen the inputs first, our guide on how to read a PMS factsheet covers the holdings section, and the piece on concentration risk in PMS covers the single-strategy side of the same problem.

Portfolio overlap is a useful number with real limits.

• Pre-investment data is partial. Without a public full portfolio, your estimate for a strategy you do not own is a floor, sometimes a loose one, and a new account may differ from the factsheet for a while.
• Holdings are a snapshot. A quarterly statement can be up to three months old, and the manager may have traded since.
• Few common holdings does not mean low correlation. Two portfolios with no shared stocks can both be full of mid-cap industrials and fall together. Diversification works only when holdings do not move in step, so keep sector overlap and return correlation beside the stock-level figure.
• A high overlap percentage is not always a fault. If both managers hold a company you want more of, that is your choice working as intended. The problem is duplication you did not know about.
• Fixing it can cost money. Selling a fund or stock to remove duplication may trigger capital gains tax and exit costs. Take advice before restructuring on one number.
• It says nothing about quality. Two strategies with nothing in common can both be poor.

Owning two PMS strategies, four mutual funds and a dozen stocks can mean real diversification or the same twenty companies held five ways. The product count will not tell you which. The common holdings will.

The difficulty is data. For what you already hold, the regulations give you a detailed statement at least every three months. For a strategy you are considering, top-10 lists set only a floor, and the most useful step is to ask the manager for the full portfolio before you commit.

Treat PMS diversification as something you verify with numbers, not something you assume because the names on the statements differ. Whether you do the sums yourself or hand your statements to a tool such as Nyra, the test is the same: you should be able to name your five largest companies and say what share of your equity each one represents.

Before you sign the next PMS agreement, spend an hour on the five steps above. Gather your statements, ask the prospective manager for a full, dated portfolio, and work out your PMS portfolio overlap, your sector overlap and your look-through exposure to your five largest companies.

If you would like a second pair of eyes, share your holdings on the PMS Sahi Hai portfolio score page and ask Nyra to flag the common holdings across your PMS, mutual funds and direct stocks, or book a conversation with the team and bring your own calculation with you.

If the new strategy brings exposure you do not have, invest with more confidence. If you are about to buy what you already own, you have saved a second fee for the same portfolio. Speak to a qualified adviser before making changes that have tax consequences.