Outperform is when an investment is expected to perform better than the return generated by a particular index or the overall market.

Since the performance of many investments is compared to a benchmark index, outperform refers to generating a higher return than a particular benchmark over time.

An index is made of securities in the same industry, or of companies that have a similar size in terms of market capitalization.

Smart decisions by senior management can help a company grow revenue and earnings faster than its competitors, or can help bring a new product to market quickly and capture more market share. Analysts identify these conditions and use them to forecast price appreciation for high-performing companies. A portfolio manager analyzes stocks with a market capitalization similar to securities in the index and forecasts that 15 particular stocks will generate a higher rate of earnings per share EPS than the average for the index.

Based on this analysis, the mutual fund increases its holdings in the 15 stocks that are expected to outperform the index.

The investment industry does not have a standard method that is used by all analysts to rate stocks. The most common use of outperform is for a rating that is above a neutral or hold rating and below a strong buy rating. Outperform means that the forecasts rates to binary options will produce a better rate of return than similar companies, but the stock may not be the best performer in the index.

If a portfolio manager consistently picks stocks that outperform the benchmark, the mutual fund or exchange-traded fund will produce higher rates of return. Money managers are ranked based on the portfolio rate of return and how those returns compare to the benchmark.

Buy vs.

Overweight (stock market) - Wikipedia

overweight in stocks sites, such as Morningstar, group funds by benchmark and rank every fund in order by its performance compared to the index. Financial sites also compare the return generated by a fund to the volatility of the portfolio over time.

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