Asset Class

An asset class is a broad category of investments grouped together based on their portfolios, design and other factors. At a high level, the most common asset classes are stocks, bonds, and cash, but these can be further broken down into more specific "sub-asset classes" to allow for more precise investing. For example, within the stock category, you might find sub-asset classes like large-cap growth, small-cap value, or international emerging markets. Each class typically reacts to market conditions in its own way because the assets within that group share similar traits. By understanding these categories, one may be able to build a more balanced portfolio that covers many different corners of the market rather than relying on just one specific type of investment.