What makes investors over or underweight

However, "buy" and "sell" are also slightly different pieces of information. From our example above, if your portfolio contains retail stocks, you should consider making ABC Co. Someone who holds this stock to diversify industries altogether, for example, might still get some value by keeping this stock.

Receive full access to our market insights, commentary, newsletters, breaking news alerts, and more. I agree to TheMaven's Terms and Policy. If you trade individual stocks there is some terminology you need to know. What Does Overweight Mean? This could mean that ABC Co. During a market downturn, it could even mean that ABC Co. Hali J. Warnock, Francis E. Lane, Lane, Philip R. Philip R. Milesi-Ferretti, Paul A. Mann, Catherine L. Catherine L.

Meade, Vishny, Vishny, "undated". Karolyi, G. Stulz ed. Stulz, Maurice Obstfeld and Kenneth Rogoff. Burcin Yurtoglu, Joshua D. Moskowitz, Ahearne, Alan G. Alan G. Wysocki, Hamid Faruqee, Andrew J Swiston, We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Investing Portfolio Management.

What Is Overweight? Key Takeaways Overweight is an outsized investment in a particular asset, asset type, or sector within a portfolio. Overweight, rather than equal weight or underweight, also reflects an analyst's opinion that a particular stock will outperform its sector average over the next eight to 12 months. Portfolio managers may overweight a stock or a sector if they think they will perform well and boost overall returns. Pros May increase portfolio gains, returns Hedges against other overweight positions.

Cons Reduces portfolio diversification Exposes portfolio to more risk overall. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.

This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Terms Fund Overlap Definition Fund overlap is a situation where an investor invests in several mutual funds with overlapping positions. Portfolio Management Definition Portfolio management involves selecting and overseeing a group of investments that meet a client's long-term financial objectives and risk tolerance.

Yield Tilt Index Fund A yield tilt index fund is a mutual fund that allocates capital as a standard index and weights its holdings towards stocks that offer higher yields.

Index Funds: How They Work, Pros and Cons An index fund is a pooled investment vehicle that passively seeks to replicate the returns of some market indexes. Underweight Underweight refers to either a fund owning less of a stock than is held in a benchmark index or an analyst expecting a stock to underperform. Index Hugger An index hugger is a managed mutual fund that tends to perform much like a benchmark index. Partner Links.

Related Articles. Stocks Why do analysts sometimes give an overweight recommendation on a stock?