Asset Classes

• An asset class is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations.

• Equities (e.g., stocks), fixed income (e.g., bonds), cash and cash equivalents, real estate, commodities, and currencies are common examples of asset classes.

• There is usually very little correlation and in some cases a negative correlation, between different asset classes.

• Financial advisors focus on asset class as a way to help investors diversify their portfolios.