Educational material from 
What you will learn
- Calculate weight as holding value divided by total value.
- Check that all parts together account for 100 percent.
- Explain why weights can change without buying or selling.
The portfolio-weight formula
Weight in percent = holding value ÷ total portfolio value × 100. A holding worth SEK 3,000 in a portfolio worth SEK 10,000 has a weight of 30 percent. This means that SEK 30 of every SEK 100 in the total is in that particular part.
Use the same valuation time and currency for every part. If a holding is expressed in a different currency, first express the values in the same currency. Our examples already use Swedish kronor, labelled SEK, and invented prices.
An allocation that adds up to 100 percent
Suppose a practice account contains two holdings and unused virtual money. In this lesson the unused money is included in the total. The weights describe the whole account rather than only the amount allocated to shares.
If you compare only the share holdings, the denominator becomes SEK 8,000. Company A then makes up 5,000 ÷ 8,000 = 62.5 percent of that invested portion. Both calculations can be useful, but they answer different questions.
If the table does not fit, scroll it sideways.
| Part | Value | Weight of the whole account |
|---|---|---|
| Company A | SEK 5,000 | 50 % |
| Company B | SEK 3,000 | 30 % |
| Virtual money | SEK 2,000 | 20 % |
| Total | SEK 10,000 | 100 % |
Prices can move the weights without a trade
Let Company A's holding rise from SEK 5,000 to SEK 6,000 while Company B and the unused money stay unchanged. The new total is SEK 11,000. A's new weight is 6,000 ÷ 11,000 × 100, approximately 54.55 percent.
B's weight becomes approximately 27.27 percent and the unused money's weight about 18.18 percent. A gains weight because its value grew more than the other parts. Its weight is not 60 percent: the total account value also changed.
Rounding can make displayed percentages differ slightly from a sum of 100. Calculate with unrounded values first, then round for presentation. A small rounding difference is different from leaving out a whole part of the account.
If the table does not fit, scroll it sideways.
| Part | New value | New weight, rounded |
|---|---|---|
| Company A | SEK 6,000 | 54.55 % |
| Company B | SEK 3,000 | 27.27 % |
| Virtual money | SEK 2,000 | 18.18 % |
What a weight tells you, and what it leaves out
A large weight means that part can have a large effect on total value when the other parts are held unchanged. Weight alone does not tell you about a company's activities, debts or the events that could affect its price.
Finansinspektionen discusses diversification across companies, industries and markets. A weight table helps reveal concentration, but it does not replace understanding the holdings. A useful exercise needs both numbers and an explanation.
This lesson does not suggest a recommended allocation. Its purpose is to help you read and calculate an allocation and notice when it has changed.
Try it yourself
Three parts are worth SEK 1,500, SEK 2,500 and SEK 6,000. What weight does the SEK 2,500 part have?
Show the solution and explanation
25 percent.
The total is 1,500 + 2,500 + 6,000 = SEK 10,000. Divide 2,500 by 10,000 and multiply by 100. Leaving out the SEK 6,000 part would give you the wrong denominator.
Check your understanding
Can a holding's weight change when its share count stays the same?
Yes. Price changes can alter both the holding's value and the portfolio's total value.
Why state whether cash is included?
A weight within the whole account and a weight within only the share holdings use different denominators. They can give different percentages for the same holding.
Practise with virtual money
Try what you just learned in a practice portfolio with virtual money. You don't deposit any real money.
How the practice portfolio worksKeep learning and practising
More lessons on this topic
Start here: shares and portfolios
Sources and examples
- Finansinspektionen: shares, risk and checking sources (in Swedish)
- Handelsbanken: portfolios and different types of risk (in Swedish)
The sources support the factual explanations. Calculations and exercises were created for this lesson. Amounts and price changes are invented unless stated otherwise.
This material is educational and does not recommend securities to buy. A simulated result does not guarantee a future result.
