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Asset class

Asset class is the classification system used by investment allocation systems. The strategy usually includes efforts to maintain a balance between the various classes in a portfolio.

Expanded Definition

The asset classes used by most individuals for their personal financial planning and investment decisions are equities and fixed incomes. Some would use broader classes including real estate, antiques, art, collectibles, etc. Subclassifications are possible such as large cap stocks, mid caps, and small cap stocks. Some would include classifications for international investments or might subclassify them by region (Asia, Europe, Americas, etc). Some would divide them by growth or value investment style. Classifications might include commodities, or REITs, etc. Fixed incomes can be divided between bonds, preferred stocks, CDs, etc. Bonds can be subclassified by corporate or municipal, by maturity (long, intermediate, short), by bond rating (investment grade or junk bond), etc.

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