Typically, the classification of an asset type is driven by the organization and the groups that end up being responsible for managing those investments. Or, in the case of an investment manager’s portfolio, the strategy behind that portfolio. Seen broadly, there are five main categories of asset classes; equity, fixed income, foreign exchange, commodities, and derivatives and each has a distinctive aspect. This is simply one view, however, and where any particular financial instrument gets classified, it can vary depending on who is doing the classification.
While there are legal, risk, and other differences between equity and fixed income, the primary difference is the underlying premise of the instrument. Equities ...
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