What is 'Portfolio Weight'
Portfolio weight is the percentage composition of a particular holding in a portfolio. Portfolio weights can be calculated using different approaches; the most basic type of weight is determined by dividing the dollar value of a security by the total dollar value of the portfolio. Another approach is to divide the number of units of a given security by the total number of shares held in the portfolio.
BREAKING DOWN 'Portfolio Weight'
Portfolio weights are not necessarily applied only to specific securities. Investors can calculate the weight of their portfolios in terms of sector; geographical region; index exposure; short and long positions; type of security, such as bonds or smallcap technology companies; or any other type of benchmark. Essentially, portfolio weights are determined based on the particular investment strategy. Portfolio weights related to market values are fluid because market values change daily. Equalweighted portfolios must be rebalanced frequently to maintain a relative equal weighting of the securities in question.Example of Portfolio Weight
The SPDR S&P 500 ETF is an investment vehicle that tracks the performance of the S&P 500. It does this by holding the weights of each stock in the index with respect to each stock's total market capitalization divided by the total market capitalization of the S&P 500. For example, say Apple Inc. accounts for 3% of the S&P 500 and Microsoft Corporation makes up 2%; the ETF then has 3% in Apple and 2% in Microsoft with respect to market capitalization to replicate the S&P 500. These weights are subject to change, and such an ETF rebalances accordingly.
As each individual stock has a weight in the ETF according to its weight by market capitalization in the S&P 500, the corresponding weights of each sector are also represented in the ETF. If technology stocks hold the greatest weight in the S&P 500 at 20%, then the replicating ETF also holds 20% in technology.
Weights can be calculated for industries, sectors, geographies and asset classes according to the investment strategy desired. The total weight of a portfolio should equal 100%. Short positions and borrowings are considered negative values and carry negative weights.
Calculating Portfolio Weight
To get the market value of a stock position, simply multiply the share price by the number of shares outstanding. If Apple is trading at $100 and there are 5.48 billion shares outstanding, then Apple's total market capitalization is $548 billion. If the total market capitalization of the S&P 500 is $18.3 trillion, then Apple's weight by market capitalization in the S&P 500 is 3%, or $548 billion / $18.3 trillion x 100 = 3%.

Equal Weight
A type of weighting that gives the same weight, or importance, ... 
Weighted Average
An average in which each quantity to be averaged is assigned ... 
Overweight
1. A situation where a portfolio holds an excess amount of a ... 
Weighted
A mathematical process by which figures and/or components are ... 
Weighted Average Market Capitalization
A stock market index weighted by the market capitalization of ... 
CapitalizationWeighted Index
A type of market index whose individual components are weighted ...

Investing
S&P 500 ETFs: Market Weight Vs. Equal Weight
Both indexes include the same stocks, but their weightings give them very different properties. 
Investing
An Introduction To Sector ETFs
Find out how these specialized ETFs can give your portfolio the punch it needs. 
Investing
3 Types Of Indexing For ETF Success
ETF success relies on the index with which it's paired. Discover three index genres for tracking average market performance. 
Investing
Rebalance Your Portfolio To Stay On Track
Like a tuneup for a car, this realignment should minimize trouble down the road. 
Financial Advisor
The Workings Of Equity Portfolio Management
Achieve analytical efficiency by applying your evaluation to a key set of stocks. 
Investing
Mutual Fund TuneUp Delivers HighPowered Performance
Rebalancing your portfolio will protect you from risk and ensure that your investments are performing at their best. 
Investing
VTI: Vanguard Total Stock Market ETF
Learn how the Vanguard Total Stock Market ETF provides an extremely diversified exposure to the entire universe of US securities with low expenses. 
Investing
IWF: iShares Russell 1000 Growth ETF
Learn about the iShares Russell 1000 Growth ETF, including how the fund is constructed, its holdings and its strong recent performance. 
Investing
VXF: Vanguard Extended Market ETF
Learn how the Vanguard Extended Market ETF provides investors with exposure to the larger stock universe, except for companies in the S&P 500. 
Investing
Newly Issued Equal Weight Equity ETF (OEW)
Investors who look for diversification and equal weight exposure to stocks in the S&P 100 index, may have an interest in the newly issued OEW ETF.

How is the value of the S&P 500 calculated?
The S&P 500 is a U.S. market index that gives investors an idea of the overall movement in the U.S. equity market. The value ... Read Answer >> 
What does the S&P 500 index measure and how is it calculated?
Learn about what exactly the S&P measures and why it's used by market participants as a tool to understand the broader stock ... Read Answer >> 
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 >> 
How do you calculate the proper weights of different costs of capital?
Understand how to calculate the weights of the difference costs of capital and how this calculation is used to determine ... Read Answer >> 
How do I use Excel to calculate a weighted average?
Learn about the calculation and interpretation of weighted averages, including how to compute a weighted average using Microsoft ... Read Answer >>