Business and Personal Finance Dictionary

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• ASSET CLASS
  
  Typically refers to securities that have similar features. For example, stocks and bonds are the two main classes. They may be subdivided into other classes like mortgages, common stock, and preferred stock. Typical asset classes are cash (money market), domestic bonds, international stocks, large cap stocks, and small cap stocks. Asset classes are used in the process of asset allocation to control the risk and return characteristics of a portfolio. In the long run, with a diversified portfolio, over 90 percent of the returns are determined by asset allocation. The remaining percentage of your return depends on which specific stock, bond or mutual fund you buy within asset classes, and when you buy it.
  
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