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Underweight
Underweight may refer to two different phenomena: analyst’s opinion in future security performance or an amount of specific security in a portfolio.
In the case when an analyst thinks that some security will underperform returns of its sector, industry or other benchmark it is called underweight.
When underweight refers to weight of the security in a portfolio it is called "underweight" if the percentage of the security in a portfolio is lower than the security weight in a benchmark index. Investors will often have underweighted portfolio when there is a belief that some security will do poorly in the next period when compared to other securities in the portfolio. By allocating security's weight downward for some period, investors try to increase portfolio’s expected returns.
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