List of Different Asset Classes for Investing

Below is the list of different Asset classes one can consider for investing in Indian markets. For building a successful balanced portfolio one has to understand different asset classes and as per their risk appetite, one has to build his/her portfolio so that it’s optimal from his risk return point of view. In this post you will look at different asset classes and their sub categories with the risk potential. This is not an exhaustive list of categories, however it covers most of them. See the Chart Below

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Readers who are reading it in Email can see the chart here or visit blog article

Points to Remember

  • The above chart does not contain exhaustive list of products and asset classes. See What is Asset Allocation
  • REIT and REMF are yet to come to India, they are not there in market yet
  • Mutual funds classification is not complete. There are different ways to classify mutual funds, the one I have shown is one of the way. Here is the list if good Equity Funds and Debt oriented Mutual funds

Comments! I am sure I missed out somethings in this chart, please suggest me something I can add.

77 CommentsAdd Comment

    • Krishna

      Thanks for the comment :) . I have added EPF and NPS . Balanced Funds was already there .

      What are your views on Silver as investment ? Do you invest in Mutual funds ?

      Manish

      • aditya modi

        manish good piece of info

        regarding silver

        if you discount the current movement in prices

        THe fact remains

        Gold-70% production is meant for ornaments so the demand is till eternity
        Silver-14% production meant for ornaments max rest is for industrial use so the demand supply correlation is complex here.

        I would recommend Gold for one simple reason-its PPP. Over the last 150 years if you track it, its purchasing power is surprisingly constant. Only thing in indian context is the question of selling it, which we consider more of a distress selling rather than a profit booking or investing decision

        Thanks

        Aditya

    • Jagbir

      I appreciate your suggestions , however I am not finding a good explaination of “flaoting rate funds” , can you explain it to me in 2-3 lines in short ?

      Manish

        • Thanks for sharing this . As we are mainly discussing Indian markets . Do we have or plans to have floating rate funds in india ? Do you know of any such fund ?

          Manish

            • Thanks .

              I now remember having seen them , but never got into details. Thanks for the link. I have added “floating rate funds” in the chart .

              I have a query , You said that they generally beat liquid fund returns, what about the risk part ? Do their risk adjusted return also higher then liquid funds ? If yes , then it does not make sense to put money in debt funds at all .

              We obviously have interest rate risk in floating rate funds , correct ?

              Manish

            • Jagbir

              Nice to know that . But why do you think these are better funds for long term ? I am not sure if they are ? Better go for pure equity funds ? Please clear my doubt ?

              Manish

              • Manish,

                I was searching for instrument to fulfill ‘short-term’ investment goal and investment in floating rate fund is part of that goal. My time frame is exactly 18 months and thus I found suggestion of investing in floating rate by srinivas appealing as it seems interest rates may rise in coming future. So now I’ve SIP in floating rate fund and RD in bank for 18 months, let’s see how it goes. I think equities are not so good for such short term goal… :)


                Jagbir
                .-= Jagbir´s last blog ..Setting up mutiple MySQL Database servers on a single linux machine =-.

                • Srinivas

                  Each fund has its own + and -. Here we are comparing only liquid v/s floating rate funds. Of course floating rate funds make better choice when interest rates are set to rise in future and they are less volatile compared to liquid funds and liquid funds annual expense ratio is more than floating rate funds.

  1. Amit Kumar

    My first impression on seeing the chart was WOW! A well thought off thing.
    I guess it covers most of assets for common man.
    You can have a miscellaneous High risk category which would have Forex, Structured Products etc. which are usually invested in by HNI.
    As far as Silver is concerned I think its going to give better returns than gold because gold to me seems already overbought commodity while we are still to see ETFs & other such convenient products for Silver. Moreover Silver has a lot more industrial use than Gold.
    .-= Amit Kumar´s last blog ..How to keep track of Mutual Fund Investments? =-.

    • Amit

      Thanks for the wonderful comment and your views on Silver . I never knew that Silver has so much to offer from Industrial point .

      Regarding Forex and Structured products . I am not sure how much will it be understood by common man . Even I dont understand structured products :) . Most of the items on charts are common man products which they can invest in and even heard about at some point in time (not all , but most of them) . I would appreciate if you can talk more about how retail participation can happen in Forex and Structured products ?

      and by the way , Silver ETF’s was something I heard last year . I guess it will be coming soon :)

      Manish

  2. Nikhil Shah

    Dear Manish

    WOW …Excellent diagrom. Can you add the following products in the diagrom

    1). Whole Life Insurance policies …
    2). Govt.Bonds / RBI Taxable Bonds..
    3). Deep Discount Bonds / Fixed Deposit..

    all above mentioned items Should include In Debt Part Only…
    Good Job…

    Nikhil

    • Nikhil

      Thanks for suggestions .

      1. Lets consider it as Endowment policies only .
      2. I have added “RBI Taxable Bonds”
      3. FD was already there .

      Can you throw some light on “Deep discount bonds” ? What are they ?

      Manish

      • Nikhil Shah

        Dear Manish,

        Here I am sending some basic information about Deep Discount Bonds…

        Typically, a deep-discount bond will have a market price of 20% or more below its face value. These bonds are perceived to be riskier than similar bonds and are thus priced accordingly.

        These low-coupon bonds are typically long term and issued with call provisions. Investors are attracted to these discounted bonds because of their high return or minimal chance of being called before maturity.

        I am also sending URL
        http://www.raagvamdatt.com/Understanding-Deep-Discount-Bonds/229/

        Thanks
        Nikhil Shah

        • Thanks Nikhil

          As we are mainly discussing Indian markets . Do we have or plans to have deep discount funds in india ? Do you know of any such fund ?

          Manish

          • Nikhil Shah

            Dear Manish

            I have invested for my son in ICICI Bank – Deep discount bond for a long term period …This bonds are tradeable in nse – Debt market…with thin volume..it should be invested in to vary financially sound companies only…At present this plans is not available….may come in future..

            Nikhil

    • Thanks Khalid

      Do you have any other things to add ? Do you think Derivatives (futures and options) should be added here from retail investors point of view ?

      Manish

  3. dhiraj

    This is an excellent diagram i can say, Thanks for this, I am regular visitors of your blog and really enjoy reading your article.

    • Thanks Dhiraj

      Nice to hear from you for the first time in comments . How old reader are you ?

      Do you understand all the product discussed on the charts ?

      Manish

      • dhiraj

        I am just a 7 month old reader but swear I didn’t miss a single post….
        As far as product is concern I understand the most of the product but one more help needed from you that if you elaborate Debt fund & Index fund little more with an examples.
        Thanks

    • Mukul

      You can trade in Gold ETF from your demat account only . Minimum amount is mostly 1 gm of gold price because 1 unit if that much priced . We dont have SIP in that. you have to do it monthly .

      manish

  4. Anand

    Hi,
    If I may, I would like to mention something. under equity head, Mutual funds and direct equities are depicted with same level of risk. I think we need to differentiate between these 2 (probably with different shades of same color). This would further justify your post about risk level in different asset classes.
    These are my 2 cents of course.

    Thanks
    Anand

    • Anand

      I accept that you are correct. I thought about this my self but then we have to include lot of shades for different funds because all the invesment options have different risk return profile . So what i did was categorise them with very broad categories .

      Manish

  5. Mahesh

    Manish,

    Excellent overview of the complete list of investment avenues. Amazing as usual your articles. Hope you will be writing dedicated articles on few asset classes in the list which are not more familiar to us.

    Regards, Mahesh

  6. Sunil S Bhagat

    it should branch from under Mutual funds. Ofcourse they would be debt as well as equity under the category. Index funds shouls be under Mfs,

    • Marshal

      We have considerd all the investment from historical return point of view . Generally people buy GOLD for long term and gold is considered safe from that point . Dont look at the returns from last 4-5 yrs .

      manish

  7. Rajesh

    HI Manish,

    Another one more excellent informative article from you. Thank you very much for that.

    These days I used to heard about “ETF-Gold Funds/Investments”. If you could put some light on that topic or share some resources that would be great.

    Thank Again.

    Rajesh

    • Rahul

      Looks like you are considering “Commodities” as “commodity trading” . thats not the case . we are considering investment options like GOLD , Silver etc only and that too for long term , and in that case they have proved to be safer investments .

      Am i Correct ?

      Manish

  8. Prashant

    Hi Manish,
    nice to see very informative chart. i need to save 1 lac in next 6-7 months for House. Could you pls tell me where should i invest of 15k montly to get good return with moderate risk.
    I am thinking of top debt MF to invest? Please advise.Thank you.

    • Prashant

      You should not expect lots of return as the time frame is just 6-7 months . I would say anything which is very liquid and less risky should suit you .. Debt funds is good idea .

      See the list of debt funds I have mentioned .

      Manish

  9. Rahul

    Hi Manish..
    really nice effort..
    the best thing about ut posts/advice/columns is that they always have an India focus and a practical approach for the common investors. Great going..
    BTW, i ve been reading for the last 2-3 months, but could understand most of the instruments..speaks a lot about ur simple and practical explanations..
    thanks

  10. ashokan arunachalam

    Good work, will be nice if you could also include Nifty Linked Debentures (Structured Products) and Portfolio Management Services (PMS) as a part of this pictorial diagram.

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