Global fund managers make investments in several countries. They allocate a slice of their funds to each country, using a weightage assigned to the country in their portfolio. This weight could depend on factors such as valuations, growth outlook, market depth, corporate governance standards and strength of the economy. These factors are then distilled to yield a weight for each country. Overweight signals a favourable shift while underweight signals a pessimistic view. Shifts in these weights by big fund managers are tracked by retail investors as they affect portfolio inflows and market movements.

Quick Primer

They decide how much money to invest by allocating weights to each country

Overweight signals a favourable bias and underweight signals pessimism