- The percentage composition of a particular holding in a portfolio. Portfolio weights can be simply calculated using different approaches: the most basic type of weight is determined by dividing the dollar value of a security by the total dollar value of the portfolio. Another approach would be to divide the number of units of a given security by the total number of shares held in the portfolio.
Portfolio weights are not necessarily applied only to specific securities; investors can calculate the weight of their portfolios in terms of sector, geographical region, index exposure, short & long positions, type of security (such as bonds or small cap technology companies) or any other type of benchmark. Essentially, portfolio weights are determined based on the particular investment strategy.
Investment dictionary. Academic. 2012.
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