Overlap between two products is calculated by summing the minimum weight in each assetfor the two portfolios. It is independent of AUM or leverage. Overlap seeks to show the degree to which two portfolios are different based on their weighted holdings. It assumes that both portfolios are held at equal weight: Portfolio A = 50%, Portfolio B = 50%.

Investors who are required to select and monitor investment managers should develop a basic understanding of investment statistics. Quantitative tools can provide you with good insight that you can use in your qualitative interviews with managers and when monitoring your investments.