![]() Similarly, the USO (crude oil) ETF and crude oil futures represent the same asset class, although they are different financial instruments. Different Instruments, Same Asset Classįor example, stocks, stock options, stock index futures, stock index ETFs and stock mutual funds all belong to the equities asset class, because all represent equity exposure (ownership stake in one or more companies). similar regulations) fits them.Īsset classes are about economic substance, not form. Financial Instrumentįinancial instruments like options, futures or ETFs are not considered asset classes, although part of the asset class definition (e.g. It is that some assets are more similar than others, and that you should consider these similarities and differences when constructing an investment portfolio. Although emerging market stocks normally belong to equities and emerging market bonds belong to fixed income, there are typical characteristics shared by all emerging market assets (such as greater political and macroeconomic risk or lower liquidity).īottom line: Main idea of the asset class concept is not exact rules or exact list. You can identify other groups of investments which could possibly represent a standalone asset class. A hedge fund that only invests in publicly traded stocks (and never shorts) is quite similar to a traditional stock mutual fund (equities asset class), but has other characteristics (such as liquidity and regulations) that justify its place in the alternative investments or hedge funds asset class.There are good reasons to include gold mining stocks in either equities or commodities.Some investments can be included in multiple asset classes. Early stage and late stage private equity. ![]() Land, residential and commercial real estate.Energy, agriculture, industrial metals, precious metals in commodities.Government bonds and corporate bonds within the fixed income asset class.There are several reasons why no unified asset class list exists:įirstly, there are subclasses (also called sub-asset classes) with very different risk, return, liquidity, and other characteristics in almost every asset class. Some sources, including the Macroption website, also work with volatility as standalone asset class. Some newer lists also include crowdfunding and cryptocurrencies. This is justified given their different risk, return, and other characteristics.Ī "full" list of asset classes can include the following: Many sources list individual types of alternative investments as separate asset classes. So, a more complete list of four asset classes is: These are often referred to as alternative investments. That said, there are many kinds of investable assets which don't fit in any of the tree major asset classes – such as commodities, real estate, or art. Traditional financial models often work with these three asset classes (or with stocks and cash only). These three are included in virtually all lists. The three major, traditional asset classes are: The lists with fewer items usually group some asset classes together. You will find lists of 3, 4, 5, 7, 9, and other numbers of asset classes. There is no official, universally accepted list of asset classes. This does not mean that all assets within the same asset class are exactly the same (for example, some stocks are riskier or less liquid than others), but generally the differences within an asset class tend to be smaller than the differences between asset classes. At the same time, all stocks (assets within the same asset class) share similar characteristics, as do all bonds. There are significant differences between stocks and bonds (different asset classes), such as risk, how they are traded, how they pay income (coupons vs. Relative Strength Index (RSI) CalculatorĪsset class is a group of assets with similar characteristics, particularly in terms of risk, return, liquidity, and regulations.Įquities (stocks) and fixed income (bonds) are traditional asset class examples.Price Weighted Stock Index Calculation and Biases.Value Weighted Stock Index: Construction, Problems, and Adjustments.SEC 13F: How to Get and Use 13F Filings.Stock Market Performance and Volatility by Day of Week.Asset Classes: List, Characteristics, Asset Allocation.Value At Risk Advantages: Why Use VAR in Risk Management.Value At Risk (VAR) Limitations and Disadvantages.How to Download Historical Data from Yahoo Finance.Excel Reverse Date Problem and How to Fix It.Interactive Brokers Quotes in Excel, Made Simple.You are in Tutorials and Reference» Other Tutorials and Notes
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