Asset classes can be define as group of securities or instruments that demonstrate similar characteristic behave similarly in market and are subject to same rules and regulations. Investment managers invest funds into various asset classes which are classified by natures of those assets. Important aspects of assets are rate of return, risk or volatility and correlation of asset with other assets in the investment. Classification of these assets can be done a follows
Asset class classification
- Equities (stocks)
- Fixed income (Bonds)
- Cash and cash equivalents (T-bills, Deposits etc.)
- Real estate (Plants, machinery etc.)
- Alternative assets (Gold, jewellery etc.)
We will learn about each of them in our future articles.