What does "underweight" mean in investing?

In investing, "underweight" refers to holding a smaller proportion of a particular asset or sector in a portfolio compared to a benchmark or recommended allocation. This strategy is often used when an investor believes that the asset or sector will underperform.

Why would an investor underweight a sector?

An investor may underweight a sector if they have a bearish outlook or believe that the sector is overvalued or facing headwinds. Underweighting can help reduce risk exposure to sectors or assets that are not expected to perform well in the near term.

How do I determine if I am underweight in a stock or sector?

To determine if you are underweight in a stock or sector, compare the weight of that stock or sector in your portfolio to the weight of the same stock or sector in a benchmark index, such as the S&P 500. If your allocation is lower than the benchmark, you are underweight in that asset or sector.

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What is UNDERWEIGHT?

UNDERWRITING

Underwriting is the process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities.

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UNDERWRITING

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