Underweight

Underweight refers to a situation where an investor holds a smaller allocation of a particular asset or asset class in their portfolio compared to a benchmark or recommended allocation. Being underweight in an asset suggests a more cautious or bearish outlook on its future performance. Fund managers or analysts might also issue an “underweight” rating, indicating that they expect the asset to underperform relative to others.

Example

An investor holds 5% of their portfolio in technology stocks, compared to the benchmark allocation of 15%, indicating an underweight position in the technology sector.