What it is:
How it works/Example:
Investment portfolios are commonly built up and diversified according to a benchmark index. Any component of a given portfolio which outweighs the percentage suggested by the benchmark is described as overweight. For instance, if 50% of a portfolio is comprised of equity when the suggested equity allocation is only 35%, the equity component is considered overweight.
Overweight should not be confused with underweight, which describes a security or portfolio component which has been allocated at a lower percentage than the benchmark suggestion.