Asset Classes and Stock-Bond Mix

Asset classes organize investments by their economic exposure, contractual rights, return drivers, liquidity, and risk behavior. The classification helps a portfolio manager decide which risks to accept, measure, diversify, and rebalance before selecting individual securities.

Asset Classes explains why a fund, account, or legal wrapper is not automatically a separate class. Stocks vs. Bonds compares ownership claims with contractual debt claims, including their different cash flows and priority in an issuer’s capital structure.

A 100% Equities Strategy removes cross-asset diversification but can still diversify within equities. Defensive Securities focuses on expected behavior during stress rather than a guaranteed safe label. Sector Breakdown measures industry concentration within equity exposure.

Questions to Verify

• Is the label describing an economic exposure, a security type, an investment vehicle, or a strategy?
• What valuation date and denominator were used for each weight?
• Are pooled funds and derivatives analyzed on a look-through basis?
• Do portfolio and benchmark reports use the same classification system?
• Which risks are diversified, and which remain concentrated across several labels?
• How do liquidity, fees, taxes, leverage, and rebalancing affect implementation?

These pages explain portfolio classifications and comparisons. They do not prescribe a stock-bond mix or identify a universally suitable security.

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