Measure
Effective number of holdings
How many equally weighted positions a fund behaves like, as opposed to how many it nominally holds. Formula: N_eff = 1 / Σ wᵢ² (wᵢ = weight of holding i).
Definition
How many equally weighted positions a fund behaves like, as opposed to how many it nominally holds.
Formula
N_eff = 1 / Σ wᵢ² (wᵢ = weight of holding i)
How to read it
For an equal-weighted portfolio of N names, N_eff equals N exactly. Any inequality in weights pushes it below the nominal count, and it falls fast: a fund where one position is 10% has an effective count dominated by that one holding.
Measured on real funds
16The measure this site exists to publish: how many equally weighted positions would concentrate as much as the fund actually does.
| Fund | Behaves like | Reported |
|---|---|---|
| SMH | 13.9 | 25 reported, 1.8x overstated |
| VGT | 15.1 | 321 reported, 21.3x overstated |
| XLK | 16.3 | 77 reported, 4.7x overstated |
| VUG | 19.8 | 151 reported, 7.6x overstated |
| SCHD | 32 | 102 reported, 3.2x overstated |
| QQQ | 34.1 | 103 reported, 3.0x overstated |
| VWO | 41 | 6,374 reported, 155.6x overstated |
| VOO | 51.6 | 512 reported, 9.9x overstated |
| VIG | 59.7 | 339 reported, 5.7x overstated |
| VTI | 67 | 3,539 reported, 52.8x overstated |
| VTV | 97 | 317 reported, 3.3x overstated |
| VT | 148.7 | 10,057 reported, 67.6x overstated |
| VEA | 268.9 | 3,890 reported, 14.5x overstated |
| VXUS | 280.1 | 8,824 reported, 31.5x overstated |
| AGG | 562.7 | 13,268 reported, 23.6x overstated |
| BND | 877.7 | 17,397 reported, 19.8x overstated |
Computed from SEC Form N-PORT, recomputed with every update of the site. How these figures are produced. Run it on your own funds — free, no account.
What it does not tell you
It measures weight concentration only. Fifty names that all move together are more concentrated in practice than the number implies, because it takes no account of correlation between holdings or of sector and factor overlap.
Applied in 3 articles
3Every figure computed with this measure on this site follows the conventions set out in the methodology. All measures →