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

2. See: Underperform.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


When you own less of a security, an asset class, or a subclass than your target asset allocation calls for, you are said to be underweighted in that security, asset class, or subclass.

For example, if you have decided to invest 30% of your portfolio in fixed-income investments, but the actual holdings account for only 10% of your portfolio, you are underweighted in fixed income.

In another use of the term, a securities analyst might recommend underweighting a particular security, which you might reasonably interpret as advice to sell.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.