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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.