Which asset class

Infrastructure assets may include incidental holdings in property and interests in land or physical infrastructure. However, benefitting from increases in the value of holding property and interests in land, or making returns from these holdings, is not the main purpose of investing in infrastructure assets. Infrastructure and private equity investments potentially earn more than property, fixed interest and cash over the long term. Their value tends to fluctuate more than property, fixed interest and cash in the short term.

These pre-mixed options invest in a mix of infrastructure, private equity and other asset classes:. Unlisted property typically comprises investments in high-quality, professionally managed retail, office or industrial real estate.

It focusses on producing returns from both rental income and capital growth. Over the long term, property returns are potentially higher than fixed interest or cash, but less than shares. Rental income is generally a significant component of property returns, which tends to enhance the stability of returns.

As property is a real asset, it has inherent inflation protection characteristics. In an investment portfolio, property can diversify investment risk due to its low correlation to other asset classes, such as shares and fixed interest. Our listed property investments are investments in property trusts, which are listed on a publicly traded stock exchange.

Pricing is based on market movements as interests are listed and traded on stock markets, as opposed to underlying asset valuations. Like unlisted property, listed property allows investors to purchase interests in a diversified and professionally managed portfolio of real estate across the commercial, industrial and retail sectors. Returns from unlisted property come from increases or decreases in value and from income in the form of rent.

Returns from listed property come from increases or decreases in share price and income from dividends. Listed REITs only earn some rental income; a significant proportion of their income is generated from the management or development fees which they charge their clients. The investment returns from listed REITs are different from and more volatile than returns from investing in real estate because listed share prices are affected by a range of factors influencing share prices, such as market sentiment and macroeconomic conditions.

Property potentially earns more than fixed interest and cash over the long term, but less than shares. Its value tends to fluctuate over time — more than fixed interest and cash, but less than shares. These pre-mixed options invest in a mix of unlisted property, listed property and other asset classes:.

Asset classes explained An asset class contains similar types of investments grouped together. Understanding investment. Lower risk assets. Higher risk assets. Types of asset classes There are three broad types of asset classes — lower risk, moderate risk and higher risk. Moderate risk assets contain a combination of higher risk and lower risk assets. Asset class risk and return characteristics. Lower risk assets Lower risk assets consist of more stable investments with steadier returns.

Types of lower risk assets. Cash investments include money in bank deposits or in short-term money market securities. How does cash make a return on investment? Returns come from interest paid on the amount invested. Of all the financial asset classes, equities are probably the most common for retail investors to focus on.

Bonds are fixed-income investments in debt securities, such as treasury notes and bills. Instruments in this asset class pay a return in the form of interest. Generally speaking, bonds are less risky than other asset classes. When it comes to asset categories that are all about liquidity, money market funds are the way to go.

Instruments such as cash, high-credit-rating securities, and debt-based securities will fall into this asset class. Money market funds aim to offer tons of liquidity at very low risk.

When talking about real estate asset classes, we mean more than just property. Financial advisors usually regard real estate asset classes as a form of protection against inflation. Forex refers to various contracts on foreign exchange trades, while derivatives refer to financial instruments that are based on an underlying asset such as an exchange-traded fund ETF or stock options. Some financial advisors may also consider cryptocurrencies to fall within this last type of asset class.

Asset classes are tools for creating an investment strategy, as they can serve to diversify your portfolio. GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments. GoCardless is used by over 60, businesses around the world. Learn more about how you can improve payment processing at your business today.

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