Asset class

A group of securities which exhibit similar characteristics, behave similarly in the marketplace, and which 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). In addition to these three main asset classes, some investment professionals would add real estate and commodities, private equity, private debt and other types of investments to the asset class mix. Whatever the asset class lineup, each one is expected to reflect different risk and return characteristics, and will therefore perform differently depending upon market environment.