Finance what does overweight mean

Not every firm uses the same terms. Some use systems with five tiers instead of three. There are no rules dictating how companies issue ratings, so it helps to become familiar with each company's system. But it can be even more confusing. In most cases, your portfolio should be made up of a diverse mix of stocks and other investments. You should try to avoid being too heavily invested in any one thing. When your portfolio is unbalanced, it may mean that you are too heavily invested in one thing.

So, what does this have to do with analyst ratings? So, for instance, in May , Apple had a weighting of 5. But none of this is very useful for the average person.

Use precise geolocation data. Select personalised content. Create a personalised content profile. Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. An overweight investment is an asset or industry sector that comprises a higher-than-normal percentage of a portfolio or an index.

An investor might choose to devote a greater portion of the portfolio to a sector that seems particularly promising, or an investor might go overweight on defensive stocks and bonds at a time when prices are volatile. Overweight and its opposite, underweight, are also used by analysts and commentators in recommendations to buy or avoid particular investments or sectors. For example, if federal defense spending is about to be increased or decreased, an analyst may recommend that an investor go overweight or underweight on defense-related companies.

In addition, many analysts attach an overweight recommendation to a stock that they believe will outperform its sector in the coming months. The alternative ratings are equal weight for average performers or underweight for below-average performers.

Strictly speaking, overweight refers to an excess amount of an asset in a fund or investment portfolio compared to the benchmark index that it tracks. Indexes are weighted. GST Software. TaxCloud Direct Tax Software. Need Help? About us. Download link sent. Category Investing. During a market downturn, it could even mean that ABC Co. TheStreet Recommends.

By TheStreet Staff. By Scott Rutt. By Eric Reed. By Veronika Bondarenko. By Vidhi Choudhary. By Tony Owusu.