Stocks can be divided by geographic areas like Canada, the U.S., international or emerging markets; strategic focuses like growth, value or dividends; company size like large cap or small cap; or specific sectors like financials, energy, mining, agriculture, infrastructure, or any other sector in the markets.
The four major types of bonds include governments, corporate bonds, high-yield bonds and real-return bonds.
Other asset classes that may be considered include commodities, real estate or really any other asset that may provide an attractive long-term return for a portfolio.
Not all asset classes need to be included in portfolios. Investors should only use asset classes in which they are familiar with and understand the potential risks. Less hands-on investors can create more simple portfolios using broad asset categories such as bonds and equities. More sophisticated investors may want to include more non-traditional asset classes and niche sectors.
