Asset Class

AAA

DEFINITION of 'Asset Class'

A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations. The three main asset classes are equities (stocks), fixed-income (bonds) and cash equivalents (money market instruments).

INVESTOPEDIA EXPLAINS 'Asset Class'

It should be noted that in addition to the three main asset classes, some investment professionals would add real estate and commodities, and possibly other types of investments, to the asset class mix. Whatever the asset class lineup, each one is expected to reflect different risk and return investment characteristics, and will perform differently in any given market environment.

Asset classes and asset class categories are often mixed together. In other words, describing large-cap stocks or short-term bonds asset classes is incorrect. These investment vehicles are asset class categories, and are used for diversification purposes.

RELATED TERMS
  1. Cash Equivalents

    Investment securities that are short-term, have high credit quality ...
  2. Asset Class Breakdown

    The relative percentages of core asset classes such as equities, ...
  3. Multi-Asset Class

    A combination of asset classes (such as cash, equity or bonds) ...
  4. Asset

    1. A resource with economic value that an individual, corporation ...
  5. Like-Kind Property

    Any two assets or properties that are considered to be the same ...
  6. Bond

    A debt investment in which an investor loans money to an entity ...
Related Articles
  1. Is Your Psyche Ready For A Bull Market?
    Active Trading Fundamentals

    Is Your Psyche Ready For A Bull Market?

  2. Diversification Beyond Stocks
    Investing Basics

    Diversification Beyond Stocks

  3. Create Your Own U.S. Equity Portfolio
    Mutual Funds & ETFs

    Create Your Own U.S. Equity Portfolio

  4. Using ETFs To Build A Cost-Effective ...
    Mutual Funds & ETFs

    Using ETFs To Build A Cost-Effective ...

comments powered by Disqus
Hot Definitions
  1. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  2. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  3. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  4. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  5. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  6. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
Trading Center