Financial Education

In order for a group of assets to be considered an asset class, they should meet the following criteria:

1. Homogeneous risk and return factors within the asset class
2. Mutual exclusivity with other asset classes
3. Low correlations (diversification) with other asset classes
4. Set of asset classes should incorporate most of the world’s investable assets
5. An asset class should be able to absorb a significant fraction of the investor’s portfolio without compromising liquidity

For more information, see all articles on: Asset Allocation, FInancial Planning, Portfolio Management

See also:

When Should an Asset Class Be Included in a Portfolio?

Tactical Asset Allocation in Portfolio Management

Portfolio Rebalancing: Setting Optimal Asset Class Target Corridors

Mean-Variance Optimizers in Asset Allocation

Macro Performance Attribution