Asset class

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The asset class (also asset class ; English asset , "property") is in the finance a group of financial products , the basis of the common features are summarized.


Each asset class has different characteristics compared to another asset class; the characteristics are the same within the class. In the case of the stock market price or market value, for example, the properties range from stable to volatile , in terms of maturity from short-term to long-term, in liquidity from very liquid to illiquid and in the risk class from risk-free to possible total loss . Depending on the characteristics of an asset class, the ratio of opportunities and risks and thus their returns differ . If several financial products have the characteristic “price stable”, they are assigned to the same asset class.

An asset class also describes a group of investments with similar value drivers in terms of return and risk factors. Institutional characteristics, statistical deviations of the observed returns, risk level, historical development and customary market classifications serve the purpose of delimitation. So, first of all, a definition of comparison criteria is required, but these are not unambiguous. Core asset classes ( English core asset classes ) have a plurality of common characteristics. This can be the correlation to the inflation rate or protection against financial crises , but also a similar regulatory structure.


The choice of asset class is directly related to the investor's attitude towards risk ( risk appetite or risk aversion ) . While the risk-taking investor prefers volatile financial products, the risk-averse investor prefers the risk-free investments. The risk class takes into account this risk attitude of the investor, which for private investors in accordance with Section 64 (4) WpHG must be presented in a written declaration of suitability to be provided to the investor before submitting the securities order .


By William F. Sharpe three criteria have been proposed: the various asset classes need to be mutually exclusive (you can a plant only assign an asset class), an asset class has to be as comprehensive and a large number of assets include, to allow diversification within the asset class and finally, returns of individual asset classes should differ from one another (that is, the returns should have a low correlation).

The classic (traditional) or core asset classes include bonds , stocks and cash . In addition, real estate is often listed as an additional asset class.

It is controversial to what extent so-called alternative investments represent a separate asset class. These investments are partly based on traditional investments, but differ in some or more value drivers and other criteria so significantly that this justifies a differentiation. Examples of alternative asset classes are private equity , hedge funds and derivatives , but also works of art and currency futures . Commodities (e.g. gold and commodities like oil ) are classified as an alternative asset class.

In most cases, derivatives are assigned to the asset class of the underlying asset ; according to this view , a stock option would be part of the stocks asset class. Private equity would belong to the same class as stocks (generic term corporate holdings). Analogous to the derivatives, hedge funds would be assigned to the asset class of the securities in which the fund trades. On the other hand, hedge funds are not an asset class in their own right, as they can generally invest in all asset classes. The free choice of asset class is a feature of the hedge fund.

Asset class by risk type

Risk type Asset class / characteristic Financial products
no financial risk very stable Sight deposits , savings deposits , time deposits , savings (cash) letters and bonds
only interest rate risk course stable Endowment insurance , “risk-free” government bonds
Interest rate or exchange rate risk slightly volatile Bonds , money market funds , real estate , option bonds , pension funds (in euros)
Interest and rate risk volatile Foreign currency bonds, precious metals , equity funds , other mutual fund ,
Total loss possible very volatile Shares , alternative investments , alternative investment funds , credit funds , futures ,
participation certificates , hedge funds , high-yield bonds , catastrophe bonds , media funds ,
microfinance funds , warrants , raw materials , ship funds , subordinated savings bonds ,
structured finance , venture capital

Individual financial products can change the asset class if the properties of a characteristic change. In March 2007 , Greek government bonds were still considered safe and stable, but have been uncertain and volatile since the Greek sovereign debt crisis from December 2009. The rescheduling with partial debt relief in March 2012 even led to a partial total loss for the creditors concerned. That is why investors and financial analysts must always check whether a financial product is still justified in a certain asset class.

A risk-free investment has a standard deviation of zero, a zero correlation with all other risky forms of investment, and offers a risk-free return . The risk premium is directly related to an investor's attitude to risk . The following risk settings can therefore be assigned to the risk premium :

risk neutral ,
risk averse ,
risk taker .

Risk-neutral investors expect a return in the amount of the risk-free interest rate , because they do not demand a risk premium and assign a disuse to the risk . Risk-averse investors, on the other hand, prefer investments that pay a risk premium. In turn, risky investors even receive a risk premium from the counterparty .

Fine classification

The table above shows that an asset class is still pretty rough. Therefore, asset classes are further divided often, such as by States . For example, within the “Equities” asset class, a distinction can be made between “Europe”, “North America” and “Asia” equities. Popular breakdowns of the stock market make use of the following distinguishing features:

The summary here is so narrow that the stocks can be compared to one another.

Asset class and diversification

If an investor's portfolio ( securities account ) consists of only one asset class and a single issuer , this portfolio has a maximum concentration risk . If this issuer becomes insolvent and there is no creditor protection ( e.g. deposit insurance ), there is a risk of total loss of the entire investment. This is why risk diversification should also be aimed for through granularity with the aim of first selecting several issuers and then selecting different asset classes. The acceptance of another asset class ( English asset allocation ) for portfolio which improves risk-reward characteristics , thus increasing the yield and / or decreases the volatility or vice versa, resulting in a higher risk-adjusted yield ( English sharp ratio ) implies. A negative market development in one asset class can then be compensated for by a positive development in another class. The asset allocation ensures that assets are distributed across different asset classes. A sensible asset allocation should optimize the risk / return ratio of a portfolio by combining different asset classes.

For example, investment companies and capital investment companies may only invest funds according to the principle of risk diversification (cf. § 214 KAGB , § 243 KAGB), which is to be transferred to all investors. This also applies to insurance in accordance with Section 124 (1) No. 7 and 8 VAG , according to which the investments are to be mixed and dispersed appropriately in such a way that excessive dependence on a specific asset or issuer or on a specific group of companies or a geographical one Space and an excessive concentration of risk in the portfolio as a whole are avoided and investments with the same issuer or with issuers belonging to the same group of companies must not lead to excessive risk concentration. Also, asset managers pay attention to the principle of diversification.

Investment strategy

Choosing one or more investment sectors is part of an investment strategy. This can pursue two different goals:

  • Focusing (restriction, concentration), for example, because he already has on certain investment sectors in which the investor expects a particularly high rate of return or where he sees little risk to these areas experience.
  • Diversification , the spread of capital across different sectors so as not to be too dependent on the development of one sector and thus reduce the risk of the overall portfolio ; see asset allocation .

Both strategies can also be combined. An investor can, for example, limit himself to European stocks, but spread his investments over various industries.


The concept of asset classes is used in portfolio theory and portfolio management , especially in asset allocation , where attempts are made to spread the risk and achieve a desired risk / return ratio by dividing the assets across different asset classes ( diversification ). In the case of investment funds , the asset classes serve in particular to describe the fund's investment policy.


Individual evidence

  1. Marc Engelbrecht, Asset Allocation in Private Banking , BoD – Books on Demand, 2015, p. 103.
  2. David F. Swensen, Unconventional success: A fundamental approach to personal investment , Simon and Schuster, 2005, p. 35.
  3. a b Frank J. Fabozzi / Harry M. Markowitz (eds.): The theory and practice of investment management , Vol. 118, John Wiley & Sons, 2002, chapter 2.
  4. Jürgen Krumnow et al. (Ed.): Gabler Bank-Lexikon: Bank-Börse-Financing , Springer-Verlag, 2013, p. 56.
  5. Jennifer Woods, The Active Asset Allocator: How ETF's Can Supercharge Your Portfolio: How Low-cost ETFs Can Supercharge Your Portfolio , Portfolio, New York 2009, ISBN 978-1-59184-195-1 , chapter 1.
  6. ^ Jean LP Brunel, Integrated wealth management: The new direction for portfolio managers , Euromoney Books, 2006, p. 121.
  7. Frank J. Fabozzi, Capital Markets: Institutions, Instruments, and Risk Management , MIT Press, 2015, p. 21
  8. Marc Engelbrecht, Asset Allocation in Private Banking , BoD – Books on Demand, 2015, p. 104.
  9. ^ Greg N. Gregoriou (ed.): Encyclopedia of alternative investments , CRC Press, 2008, p. 16.
  10. Axel Hörger, Commodities as an asset class: a real alternative , in: Hartmut Leser / Markus Rudolf (Eds.), Handbuch Institutionelles Assetmanagement, 2003, p. 762 ff.
  11. Dirk Söhnholz / Sascha Rieken / Dieter G. Kaiser, Asset Allocation, Risk Overlay and Manager Selection , 2010, p. 36
  12. Thomas Schuster / Margarita Uskova, Financing: Bonds, Shares, Options , 2015, p. 154
  13. Florian Bartholomae / Marcus Wiens, Game Theory: An application-oriented textbook , 2016, p. 11
  14. Matthias Kräkel, Organization and Management , 2007, p. 70
  15. Florian Bartholomae / Marcus Wiens, Game Theory: An application-oriented textbook , 2016, p. 11
  16. Dirk Söhnholz / Sascha Rieken / Dieter G. Kaiser, Asset Allocation, Risk Overlay and Manager Selection , 2010, p. 99