How can I avoid paying double fees on NVDA and MSFT?

Check the holdings of your funds to avoid significant overlap. Choose funds with different focuses or invest directly in the stocks.

Does holding overlap significantly affect returns?

Yes, it can reduce net returns over time, especially as additional fees compound over years.

XLK Investors Pay Twice for Same Mega-Cap Tech Exposure

According to 24/7 Wall St., the XLK ETF's low expense ratio masks hidden fees that effectively double the cost of mega-cap tech exposure. Investors may be paying twice for the same stocks.

July 21, 2026

2 min read

Source: 24/7 Wall St.

According to 24/7 Wall St., the XLK (Vanguard Information Technology Index Fund ETF) appears to be a low-cost option at first glance, but investors may be paying hidden fees that effectively double the cost of exposure to mega-cap tech stocks like NVDA, MSFT, and AAPL.

Details

The report highlights that XLK's expense ratio is only 0.10%, which is very low compared to actively managed funds. However, the problem lies in the fund's heavy concentration in mega-cap stocks, leading to significant overlap with other funds owned by the same investor. For example, if an investor also holds an S&P 500 fund, they are effectively paying fees on the same stocks twice.

Context

This phenomenon is not new but has intensified as market concentration in a few mega-cap tech stocks has grown. XLK allocates over 40% of its assets to the three largest companies: Apple, Microsoft, and NVIDIA. Consequently, investors holding multiple index funds may find themselves paying recurring fees on the same holdings.

What It Means for Investors

Investors should review their portfolios to ensure there is no significant overlap between the funds they own. Such overlap can reduce net returns without adding real diversification. It is advisable to check the holdings list of each fund to avoid paying duplicate fees.

Frequently Asked Questions

Hidden fees are recurring management fees paid on the same stocks when an investor holds multiple funds with overlapping holdings, such as XLK and an S&P 500 fund.

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This article was rewritten in Wrqti's editorial style based on information from the original source above. Content is informational only — not investment advice.