DEFINITION of 'Overweight'

1. A situation where a portfolio holds an excess amount of a particular security when compared to the security's weight in the underlying benchmark portfolio. Actively managed portfolios will make a security overweight when doing so will allow the portfolio to achieve excess returns.

2. An analyst's opinion regarding the future performance of a security. Overweight will usually signify that the security is expected to outperform either its industry, sector or, even, the market altogether.


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BREAKING DOWN 'Overweight'

1. Securities will usually be overweight when a portfolio manager believes that the security will outperform other securities in the portfolio. An example of overweighting a security would be when a portfolio normally holds a security at a weight of 15%, and the security's weight is raised to 25% in an attempt to increase the returns of the portfolio.

2. An example of an analyst's rating of overweight would be: The stock's return is expected to be above the average return of the overall industry over the next eight to 12 months. Specific analyst definitions vary regarding the time frame used and the benchmark the security is compared against.

  1. Benchmark

    A standard against which the performance of a security, mutual ...
  2. Underweight

    1. A situation where a portfolio does not hold a sufficient amount ...
  3. Outperform

    An analyst recommendation meaning a stock is expected to do slightly ...
  4. Portfolio Manager

    The person or persons responsible for investing a mutual, exchange-traded ...
  5. Portfolio Management

    Portfolio Management is the art and science of making decisions ...
  6. Underlying

    1. In derivatives, the security that must be delivered when a ...
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