Sub-Asset Class

Definition: Sub-Asset Class

Before explaining Sub Asset Class, let’s first discuss an Asset Class. An Asset class is a different kinds of Assets. For example, Equity, Fixed Income, Real Estate, Derivatives etc. Now the subcategory of an asset class is called as sub asset class.

The sub-asset class can be based on the Size, type, sector and maturity of that particular Asset Class. Also the collection of assets in a sub asset class have common characteristics.  The chart shown below will clear the picture between an asset class and a sub asset class.

Diversification is very crucial in a portfolio in order to minimize risk and maximize returns. Sub asset class helps in diversifying the portfolio by investing in varied subcategories of assets.

Hence, this concludes the definition of Sub-Asset Class along with its overview.

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