Asset Class

An Asset Class is a group of financial instruments that share similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations. The major asset classes include equities (stocks), fixed income (bonds), real estate, commodities, cash and equivalents, and alternative investments such as private equity and hedge funds. Diversifying across asset classes is a core principle of portfolio construction, as different assets tend to react differently to economic cycles, helping to manage overall portfolio risk.