A certain group of assets that have the same, or similar, characteristics in terms of nature, type, risk-return profiles, revenue generation patters, etc. An asset class consists of assets or investments that behave similarly in the marketplace and bear or exhibit similar defining elements. For such similarities, a given asset class would be subject to, or treated under, similar laws and regulations within a specific economy or beyond.

The main examples of asset classes include equities (e.g., stocks), fixed income (e.g., bonds), real estate, commodities, cash and cash equivalents, currencies, and cryptos.

Investors tend to hold certain assets belonging to a certain asset class for different considerations. For example, equities might be the best asset class for investors who seek to attain higher returns. Even within the same asset class, a number of sub-classes may exist, such as stocks in the case of equities (stocks are a sub-class within the broader asset class “equities”). Stocks, per se, can be further classified into groupings featuring coherent elements (e.g., large cap stocks, small cap stocks, growth stocks, value stocks, etc.)