Asset Classes

An asset class is a group of securities that have similar financial and risk characteristics, are subject to the same laws and regulations and behave similarly in the marketplace. The three main asset classes are equities (stocks), fixed-income (bonds) and cash equivalents (money market instruments). At times, real estate and commodities are also added as asset classes.

The most important assets classes are:


Shares or stock of listed companies or any other security representing an ownership interest.

Debt or fixed income (bond)

An instrument of indebtedness of the company (bond issuer) to the holders. The issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay them interest (the coupon) and in most cases to repay the principal at a later date. Debt securities include government bonds, corporate bonds, municipal bonds, preferred stock, collateralised securities and zero-coupon securities.


Energy, raw materials and agricultural products which are tradable and physically deliverable. Commodities are traded physical or virtual. There are currently about 50 major commodity markets worldwide that facilitate investment trade in nearly 100 primary commodities. (see:

Real estate

One can invest directly in real estate (i.e. owning residences, commercial real estate, or agricultural land) which involves direct management of the assets. Indirect investment in real estate includes investing in real estate investment trusts (REITs) (publicly traded shares in a portfolio of real estate), for instance.


A derivative generally derives its value from the performance of an underlying entity, such as an asset, index, or interest rate. Derivatives can include forwards, futures, options, swaps, ETFs etc. (see:

Private equity

Equity capital that is not quoted on a public exchange. Private equity consists of investors and funds that make investments directly into private companies or conduct buyouts of public companies that result in a delisting of public equity. Private equity is more common to fund new technologies, expand working capital within an owned company, make acquisitions, or to strengthen a balance sheet.

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