What is asset class?

 An asset class is a group of financial instruments or investments that have similar characteristics and behave similarly in the marketplace. The three main asset classes are equities (stocks), fixed income (bonds), and cash equivalents (such as money market funds). There are also several other asset classes, including real estate, commodities, and alternative investments, such as hedge funds and private equity.

Each asset class has its own set of risks and returns, and the appropriate mix of asset classes for a given investor will depend on their investment objectives, risk tolerance, and time horizon. Diversification, which is the practice of investing in a variety of asset classes, can help to mitigate the risk of investing in a single asset class.