The Silent Risk of Over Diversification in Retirement Portfolios

This happens because many investors treat fund selection like a checklist when they add a REIT ETF, a high-dividend ETF, an international fund, a bond fund, and a covered call fund without examining exactly what is inside each. The overlap here can be significant as two large-cap dividend ETFs may hold 60% to 70% of the same companies, meaning you are doubling your exposure to those names without doubling income.The most common version of over-diversification in retirement portfolios shows up in yield dilut ...