Underweight

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.

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.


Investment dictionary. . 2012.

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Look at other dictionaries:

  • underweight — 1899, from UNDER (Cf. under) + WEIGHT (Cf. weight) …   Etymology dictionary

  • underweight — [adj] thin angular, anorectic, bony, gangly, malnourished, puny, scrawny, shadow, skeleton*, skin and bones*, skinny, starved, stringbean*, undernourished, undersized; concept 491 Ant. chubby, fat, overweight, plump, thick …   New thesaurus

  • underweight — ► ADJECTIVE ▪ below a weight considered normal or desirable …   English terms dictionary

  • underweight — [un′dər wāt΄; ] also, for adj. [, un΄dər wāt′] adj. below the normal, desirable, or allowed weight n. weight that is less than needed, desired, or allowed …   English World dictionary

  • Underweight — The term underweight refers to a human who is considered to be under a healthy weight. The definition is usually made with reference to the body mass index (BMI). A BMI of under 18.5 is usually referred to as underweight [National Heart Lung and… …   Wikipedia

  • underweight — Usually refers to recommendation that leads an investor to reduce their investment in a particular security or asset class. The reduction is usually with respect to a benchmark. Suppose that U.S. equities compose 40% of the benchmark portfolio.… …   Financial and business terms

  • underweight — 1. adjective a) Of an inappropriately or unusually low weight. Hes so underweight hes had to buy smaller clothes. b) Not too heavy for an intended purpose. Hes thirty pounds underweight …   Wiktionary

  • underweight — un·der·weight wāt adj weighing less than the normal amount for one s age, height, and build <underweight children> <underweight adults typically have a body mass index of less than 18.5> …   Medical dictionary

  • underweight — [[t]ʌ̱ndəwe͟ɪt[/t]] ADJ GRADED: usu v link ADJ If someone is underweight, they are too thin, and therefore not healthy. Nearly a third of the children were severely underweight. Ant: overweight …   English dictionary

  • underweight — UK [ˌʌndə(r)ˈweɪt] / US [ˌʌndərˈweɪt] adjective thinner and lighter than normal, especially in a way that is unhealthy Their son appeared underweight for his size and age. Some of the babies were seriously underweight …   English dictionary

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