Underweight
Definition of 'Underweight'1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's weight in the underlying benchmark portfolio. This often occurs when a portfolio is actively managed and underweighting a security may allow the portfolio manager to achieve returns greater than that of the benchmark.2. An analyst's opinion regarding the future performance of a security. Underweight will usually mean that the security is expected to underperform either its industry, sector, or even the market altogether. |
|
Investopedia explains 'Underweight'1. Portfolio managers can make the securities underweight if they believe will underperform when compared to other securities in the portfolio. For example consider a security in the benchmark portfolio with a weight of 10%. If the manager believes the security will underperform over a certain time period, they will allocate the security a weight of less than 10% for that period, in hopes of increasing the portfolios expected return.2. An example of an analysts underweight definition is: The stock's return is expected to be below the average return of the industry over the next eight to 12 months. Analyst's definitions vary regarding the time frame used and the benchmark the security is compared against. |
Related Definitions
Articles Of Interest
-
4 Strategies For Managing A Portfolio Of Mutual Funds
Discover some common strategies to devise a plan and maintain your holdings to reflect it. -
Portfolio Management For The Under-30 Crowd
Young investors have some advantages over their older counterparts. Read on to learn how to build a portfolio that will grow with you. -
Peter Lynch On Playing The Market
Everyone can appreciate great advice from a professional. Read on to benefit from the vast experience of Peter Lynch. -
7 Common Investor Mistakes
Find out how to avoid - or fix - these frequent investing errors. -
Mutual Fund Tune-Up Delivers High-Powered Performance
Rebalancing your portfolio will protect you from risk and ensure that your investments are performing at their best. -
Is Your Portfolio Overweight?
As time passes, in order to remain profitable, investors need to put certain parts of their portfolio on a diet. -
Modern Portfolio Theory: Why It's Still Hip
See why investors today still follow this old set of principles that reduce risk and increase returns through diversification. -
Women: Invest In Your Financial Literacy
Learning about money may seem intimidating, but it's not as hard as it looks. -
4 Behavioral Biases And How To Avoid Them
Here are four common common behavioral biases for traders and how to minimize their effects on your portoflio. -
Mutual Fund Ratings: Crucial or Insignificant?
Mutual fund ratings can help investors, but they have their drawbacks as well.
Free Annual Reports