Overweight

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What is 'Overweight'

Overweight is 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.

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.

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RELATED FAQS
  1. When might an analyst take an overweight position in a particular stock?

    Discover when an analyst might take an overweight position on a stock. Overweight rating indicates that the analyst has a ... Read Answer >>
  2. How does being overweight in a particular sector increase risk to a portfolio?

    Learn about the risks of having a portfolio that is overweight in a particular sector and how investors should regularly ... Read Answer >>
  3. How can I determine if my portfolio is overweight in certain sectors?

    Learn why you should review your portfolio to determine if they are overweight in a certain sector, and find out why you ... Read Answer >>
  4. Why do analysts sometimes give an overweight recommendation on a stock?

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  5. How can I calculate the expected return of my portfolio?

    Understand the components of the equation used to calculate the expected return of an investor's portfolio. Learn why the ... Read Answer >>
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    Learn why health-care costs are often higher for overweight and obese patients. Find out how insurers and employers are recovering ... Read Answer >>
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