Asset Classes

Asset classes are categories of financial assets that have similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations. The most common asset classes include equities (stocks), fixed income (bonds), cash and cash equivalents, real estate, commodities, and alternative investments (such as private equity or hedge funds). Each asset class has different levels of risk and return, and they often perform differently under various market conditions.

Example

An investment portfolio might include different asset classes such as 50% stocks, 30% bonds, 10% real estate, and 10% cash to balance risk and potential returns.