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.
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In contrast to their reduced conviction towards US equities, which a net 39 per cent now intend to underweight over the next year, investors remain positive on both Europe and Japan - both economies where quantitative easing continues.
BofAMerrill Lynch: Investors selectively lowering risk after bond sell-off
While there is evidence of some pro-cyclical rotation, European investors remain underweight in several higher-beta sectors; notably banks, basic resources, real estate and construction.
BofA survey finds sentiment coming back toward Europe
At the global level, a net 21 per cent remain underweight banks this month, down 14 percentage points month-on-month.
Europe stages a comeback in fund manager sentiment

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