Underweight

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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. If one thinks the U.S. will underperform, the investor may reduce the exposure to U.S. equity to less than 40%.

Underweight

1. Describing a portfolio or fund with too little exposure to an industry, sector, or something else. See also: Overweight.

2. See: Underperform.