An asset class is a categorization of assets by their similar financial characteristics, behaviors in the market, and laws and regulations to which they are subject. The main asset classes are stocks, or equities; bonds, or fixed income; and cash equivalents, or money market instruments. Different asset classes are used to vary portfolio investments because each class is expected to reflect different percentages and rates of return on your money. Large US Companies, like Coca-Cola (KO), are mature consumer product companies which usually have a more stable stock price. Small US companies are typically more volatile to market changes, which means their stock price will increase or decrease more quickly than a large company’s stock price. Other examples of asset classes would include: Emerging Markets, Large European companies, Real Estate, and different types of bonds.

Written by: ||lauren pearce, associate||