Asset Class

An asset class is a category or group of similar financial products. Examples of asset classes are forex, stocks, indices, commodities, bonds, alternative investments, etc.

Asset classes can be subjective, and there are no firm definitions. For example, some traders might think commodities can be broken down into sub-asset classes, for example, energy products, precious metals, agricultural commodities, etc.

Stock traders might differentiate stocks by developed and emerging market status, and others might distinguish by continent or even exchange. A cryptocurrency trader might object to calling cryptos an alternative investment.

Some even consider instruments like futures and options to be asset classes.

Asset classes are important because traders and investors focus on positive and negative correlations between different markets and allocate their positions and investments accordingly.