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ETFs · · 5 min read

How Many ETFs Should You Own?

Most investors think owning more ETFs means better diversification but that’s often wrong. In this guide, we break down how many ETFs you actually need, why ETF overlap is a hidden risk, and how UK investors can build a simple 2–3 ETF portfolio that is truly diversified.

How Many ETFs Should You Own?
ETFs To Buy?

If you own five, six, or even ten ETFs, there’s a very good chance you’re actually owning the same companies multiple times without realising it.

This article explains:

Before we begin, ask yourself this question:

How many ETFs do you currently own and do you actually know how diversified you are?

The Simple Answer: Most Investors Only Need 2–3 ETFs

For most long-term investors, two or three ETFs is usually enough.

That might sound surprising in a world where influencers constantly recommend buying multiple funds.

But diversification doesn’t come from the number of ETFs you own.

It comes from what those ETFs actually hold.

Many funds track very similar indexes and therefore hold the same companies.

For example:

These often contain the same large technology companies such as:

So even if you own multiple ETFs, your portfolio may still be heavily concentrated in a handful of companies.

ETF Screener showcasing how the popular 3 have huge overlap.

Strategy 1: The One ETF Portfolio

The simplest strategy is owning one global ETF.

Many investors choose a global index fund that tracks developed and emerging markets.

Examples typically track indexes like:

These funds already contain thousands of companies worldwide.

A typical global ETF might include:

For beginners, this approach can be extremely effective.

One ETF gives you:

It’s not lazy.

It’s efficient.

And historically, global index funds have delivered strong long-term results compared with leaving money in cash or savings accounts.

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Strategy 2: The 2–3 ETF Portfolio (Core + Tilt)

Many investors prefer adding one or two additional ETFs alongside a global fund.

This creates a core and satellite strategy.

The idea is simple.

Your main holding covers the entire market, while smaller allocations add specific exposure.

Step 1: Your Core ETF

Typically 70–90% of your portfolio.

This is usually a global ETF covering developed and emerging markets.

This keeps your portfolio diversified and stable.

Step 2: Add a Tilt (Optional)

Your second ETF may target a specific investment theme.

Common tilts include:

Technology / Growth

Some investors add an ETF tracking:

These provide heavier exposure to major US technology companies.

However, remember:

Global ETFs already contain many of these stocks.

So adding another US-focused ETF increases your exposure significantly.

Income / Dividend ETFs

Income ETFs focus on companies that pay strong dividends.

These can appeal to investors looking to generate income over time.

Dividend funds often include sectors like:

They may also have different holdings than growth-focused funds, which can improve diversification.

Home Bias ETFs

Some investors like adding exposure to their domestic market.

For UK investors this might include:

This can increase exposure to companies and currencies closer to home.

Why Too Many ETFs Can Be a Problem

Many portfolios look diversified on the surface.

But when you examine the holdings, you often see something like this:

At first glance that seems balanced. But the reality is different.

Those three funds can easily lead to 90%+ exposure to the United States.

Even worse, the top 10 companies may dominate all three funds.

For example:

CompanyAppears In
AppleAll World, S&P 500, NASDAQ
MicrosoftAll three
NvidiaAll three
AmazonAll three

So your portfolio might appear diversified across multiple ETFs, but actually be heavily concentrated in the same stocks.

This is known as ETF overlap.

A person holding a business card in front of a computer screen
Photo by Jean-Luc Picard / Unsplash

ETF Overlap Explained

ETF overlap happens when multiple funds hold the same companies.

The result is hidden concentration.

For example:

If three ETFs each allocate 8–10% to Apple, your combined exposure could be far higher than you realise.

This increases risk because:

That’s why understanding ETF holdings is critical.

When Owning More Than Three ETFs Makes Sense

There are situations where holding more ETFs can be reasonable. This usually happens when investors want very specific exposures.

Examples include:

But these allocations are usually small percentages of a portfolio.

For example:

The key difference is intentional allocation, not random diversification.

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Example of a Simple ETF Portfolio Structure

A simple portfolio could look like:

AllocationETF Type
70–90%Global All-World ETF
10–20%Dividend / Income ETF
OptionalHome market ETF

This keeps the portfolio:

Most importantly, it avoids unnecessary overlap.

Diversification Isn't About Quantity

Many investors fall into the trap of thinking more ETFs equals more diversification.

But diversification comes from exposure to different companies, sectors and regions not simply owning more funds.

Sometimes the simplest portfolios perform the best.

Because they are easier to understand and easier to stick with.

The Most Important Investing Principle

At the end of the day, building wealth through investing is rarely about complexity.

It’s about time in the market.

You don’t need ten ETFs.

You need:

Twenty years in a well-constructed portfolio often matters far more than constantly tweaking your investments.

Tools to Analyse Your ETF Portfolio

If you want to understand your portfolio better, tools can help you analyse:

You can also simulate portfolios to see how diversified they really are.

👉 You can explore tools like the ETF Screener

They allow you to:

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