What Are Asset Classes?

What do a Great Dane and a Toy Poodle have in common? At first glance, seemingly nothing. Side by side these two animals will look comical together. Yet we still categorize them both as dogs because, despite the dramatic difference in appearance and stature, these breeds have similar characteristics shared by all domestic canines. In the world of investing, investments that share similar characteristics are organized into groups called Asset Classes. Asset classes can appear and act as differently as the Great Dane and Toy Poodle.