Traditional Investing & Portfolio Theory

What is an asset class?

An asset class is a group of investments that share similar characteristics, behave alike in the market, and are subject to the same rules. The traditional classes are equities, fixed income, cash, and real assets such as property and commodities. For example, equities represent ownership in companies, while fixed income represents loans that pay interest. Grouping investments this way helps investors compare options and structure a portfolio across categories that tend to respond differently to economic conditions.