DEMYSTIFYING ASSET CLASSES AND INVESTMENT CATEGORIES
An asset class is nothing more than a group of securities that behave similarly in the marketplace. By understanding their behaviors, you can make more informed decisions about how to allocate your funds in order to reduce risk and increase your probability of making a strong return.
Financial assets are grouped based on common characteristics such as a focus on equities, fixed-income or asset allocation investment options.
It's tempting to put all your eggs in the highest performing baskets, but past performance isn't necessarily a true indicator of what will happen in the future. Having a variety may help alleviate your potential risk.
This is just another way of indicating how big a company is and the total value of its tradable stock. As a general rule, large-cap companies have a tendency to provide more stability and less growth, and small-cap companies offer less stability and more growth potential.
View asset class overviews