What is Marketweight?

Marketweight refers to the value rating given to a fixed-income instrument if it's 澳洲幸运5官方开奖结果体彩网:credit spread is aligned with market expectations.

Understanding Marketweight

The marketweight ranking system gives a subjective estimate of the accuracy of a fixed-income instrument's current credit spread which can then be used by an investor to determine whether that instrument is an attractive investment. The system includes three ranks - marketweight, 澳洲幸运5官方开奖结果体彩网:overweight and 澳洲幸运5官方开奖结果体彩网:underweight. The marketweight rating indicates that the current credit spread of an instrument is in line with market expecta🐠tions. Essentially, a fixed-income security deemed to be marketweight is said to offer a credit spread that's at or near t𝓡he market's consensus.

Just as stocks may have a buy, sell or hold recommendation, this credit rating system will rate a debt instrument as overweight, underweight or marketweight. Being marketweight is similar to having a hold rating𒆙, whereas being overweight or underweight is equivalent to the buy and sell titles, respectively. Analysts will determine whether the current credit spread is an appropriate mea💖sure of risk for the investment and place a recommendation accordingly.

Just as equity securities, fixed-income instruments are separated by several categories. These factors include, among others, 澳洲幸运5官方开奖结果体彩网:credit risk (or credit rating), geography, industry, yield, and maturity. Fixed-income securities add another layer of consideration for contingencies, such as call-options and convertibility, that could further impact por𒁃tfolio weighting decisions.

Fixed-income instruments such as investment-grade bonds might be described as being held at marketweight, meaning a portfolio is neither overweight nor underweight (allocated to) investment-grade bonds relative to a common benchmark. When a portfolio manager has a particular view, such as a bullish stance on bonds from the industrials sector, a portfolio can be slanted from the market's consensus by overweighting the portfolio to an overweight position in industrials bonds.