An asset class is a group of securities that have similar risk and return characteristics, and behave similarly under changing macro-economic environments. Asset classes fall into four main categories: cash and cash equivalents, equities (or stocks), fixed income (or bonds), and alternatives.
Equities can be further categorized based on factors such as geographical location, size, industry and sectors. Fixed income securities can further be categorized based on geographical location, creditworthiness of the issuers, time to maturity, and other factors.
Assets that do not fit in the cash, equities or fixed income categories are frequently called Alternatives. Alternatives assets can include hedge funds, commodities, infrastructure and real estate.