Asset Classes

Introduction

Asset classes are usually discussed in the context of asset allocation within an Investment Policy Statement. Investopedia defines Asset Class as:

A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations. The three main asset classes are equities (stocks), fixed-income (bonds) and cash equivalents (money market instruments).

Main Asset Classes

The three main asset classes can be refined further as shown below. Depending on the investor, some of the items below may be considered to fall in more than one class.

Equities

• Equities (stocks)
• Real Estate, including Real Estate Investment Trusts
• Commodities, including Gold, Oil and Natural Gas, Base Metals, Agriculture, and Lumber

Fixed Income

• Bonds
• GICs
• Canada Savings Bonds

Cash and equivalents

• Money Market Funds
• High-Interest Savings Accounts

Further Consideration

Some investors might further change the categorization by treating Real Estate and Commodities as separate asset classes rather than including them within equities.