List of Different Asset Classes for Investing

POSTED BY manish ON January 14, 2010 COMMENTS (77)

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,Β 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

List of Different Asset Classes for Investing

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

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77 replies on this article “List of Different Asset Classes for Investing”

  1. ashokan arunachalam says:

    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.

    1. ashokan

      thanks for suggestions πŸ™‚ . I think that would be little more on higher side. Lets keep a list of more widely used things .

      Manish

  2. Rahul says:

    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

    1. Rahul

      thanks for your comment .

      Manish

  3. Pallav desai says:

    Thanks for helping us lot.We will get much benifit by using ur own idea as an expert view.

    1. Pallavi

      Nice to know that you are ready to plan things on your own . thats good . Let me know if there is any thing required .

      Manish

  4. Prashant says:

    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.

    1. manish says:

      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

  5. Rahul says:

    Manish,

    Don’t you think commodities also shd be in yellow with Real Estate.

    Reg’s

    1. manish says:

      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

  6. Rajesh says:

    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

    1. Rajesh

      nice to hear from you in the first comment . Keep commenting πŸ™‚

      ETF are the new type of instrument which are very effective and should be used by everyone . they are popular in US but gaining popularity in India now , see : https://www.jagoinvestor.com/2008/08/what-are-etfs-etfs-are-basket-of.html

      Gold Funds are mutual funds which invest in gold mining companies , Its different then investing in GOLD : https://www.jagoinvestor.com/2008/09/gold-funds-what-are-alternatives-to.html

      We also have GOLD ETF’s as investment option in GOLD .

      Manish

      1. Rajesh says:

        Thanks Manish for sharing these links which are very much informative.

        1. manish says:

          Rajesh

          You can invest in Gold ETF’s using your Demat account only . Make sure you have a demat account if you want to invest .

          Manish

          1. Rajesh says:

            Okay. Got it πŸ™‚

  7. Marshal says:

    Hi manish,

    Very nice chart, but what is reason of gold coming under category of “Safe”?

    Marshal

    1. manish says:

      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

  8. Sunil S Bhagat says:

    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,

    1. manish says:

      Sunil

      Index funds are already under MF .

      Manish

  9. vivek says:

    hi manish
    can i purchase foreign mutual funds, if yes ..then how. please elaborate

    1. manish says:

      I am not sure on this . Will check out

      Manish

  10. Sunil S Bhagat says:

    Maybe to the Mutual funds u can sub categorize as Indian and foreign also.

    1. manish says:

      Sunil

      But that would be a different kind of classification . Can you tell me where should I branch that out from ?

      Manish

  11. Mahesh says:

    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

    1. manish says:

      Mahesh

      Thanks a lot . Which one of those you dont understand ? let me know

      Manish

      1. Mahesh says:

        Hi Manish,

        I am holding NRI status. Looking forward to invest some amount in bonds issued by GOI with locking period more than 3 years. Can you help in sharing the list of bonds issued by GOI for which NRIs are elegible ?
        And what should be the procedure for this investment.

        Thanks a lot in advance, Mahesh

  12. Anand says:

    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

    1. 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

  13. Mukul says:

    Hi Manish, Where and how can I get gold ETFs? What is the minimum investment?is it like SIP(means monthly or yearly)?
    .-= Mukul´s last blog ..Decade recap =-.

    1. manish says:

      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

  14. balbir2997 says:

    Thank you for such a nice details πŸ™‚

    1. manish says:

      Balbir

      Thanks for the comment . Did you see any new product on the chart which you were not aware of ?

      Do you have idea about REIT and REMF ?

      Manish

  15. dhiraj says:

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

    1. manish says:

      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

      1. dhiraj says:

        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

  16. khalid says:

    Dear Manish,
    Nice List for investments in Indian market. I think you included all corners of the investment world.
    Thanks for sharing.
    .-= khalid´s last blog ..Infosys Q3 FY10 : Net up 2.8% =-.

    1. manish says:

      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

  17. I have provided some thoughts on asset allocation on my website:
    It also has a blog on industry trends

    1. manish says:

      Thanks for the Links πŸ™‚

      What are your views on portfolio rebalancing ?

      Manish

      1. Nikhil Shah says:

        Dear Manish

        I have already made portfolio rebalancing – Calculation Excel Sheet ……if you interested pl write…

        Pl note my e-mail Id :

        nikhil201053@gmail.com
        nikhil201053@rediffmail.com

        Nikhil Shah

        1. NIkhil

          send me the excel ..

          Manish

        2. vivek says:

          hi nikhil
          please send ur excel sheet to my id:
          vivek.chowdhry@gmail.com
          thanx

  18. Nikhil Shah says:

    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

    1. manish says:

      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

      1. Nikhil Shah says:

        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
        https://www.raagvamdatt.com/Understanding-Deep-Discount-Bonds/229/

        Thanks
        Nikhil Shah

        1. manish says:

          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

          1. Nikhil Shah says:

            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

            1. manish says:

              Nikhil

              can we buy those deep discount bonds through Demat account as its tradable ?

              Manish

            2. Nikhil says:

              Manish

              Yes ..You can buy those deep discount bonds through Demat account as its tradable From NSE Or BSE Stock Exchange…Debt Market module…

              Nikhil

            3. manish says:

              Ok . let me try that .. I mean i have ICICI demat ,

              Manish

  19. Amit Kumar says:

    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? =-.

    1. manish says:

      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 πŸ™‚ . 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 πŸ™‚

      Manish

      1. Amit Kumar says:

        Yeh there were talks of launching Silver ETF by Benchmark MF, but I don’t know why its delayed. About structured products last year ICICI Pru came with debt investment option – SMART Fund – whose returns were linked to NIFTY performance, but I am not sure how was it received by Retail Investors. You can find some details about the same here – https://www.moneycontrol.com/news/mf-interview/will-icici-pru-smart-fund-appeal-to-retail-investors_353397.html
        But then its a complex thing!
        .-= Amit Kumar´s last blog ..Invest Rs 63,000 and save full Income Tax on Rs 1,00,000 under Sec 80C! =-.

        1. manish says:

          NIce link . let me see if I can write something on that front sometime πŸ™‚

          Manish

  20. Jagbir says:

    excellent list, manish. where floating rate fund accommodate here… under Debt Funds category?
    .-= Jagbir´s last blog ..Setting up mutiple MySQL Database servers on a single linux machine =-.

    1. manish says:

      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

      1. Srinivas says:

        Floating rate funds are the debt funds which invest in govt bonds or corporation and interest rate varies (floats) as per the current market rates. Floating rate funds are a better choice in a situation when interest rates are set to rise.
        For more retails https://www.riversource.com/rvsc/global/docs/qw/floating-rate.pdf

        1. manish says:

          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

          1. Srinivas says:

            Yes. almost all the fund house has floating rate funds. they have always beat debt liquid plus in returns. I wonder how come you are not aware of floating rate funds.
            refer valueresearchonline.com Debt->Floating rate option and search
            refer https://www.mutualfundsindia.com/images/mfithoughts/20090713.pdf for returns analysis v/s debt liquid funds.

            1. manish says:

              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

          2. Jagbir says:

            manish,

            interestingly, I myself came to know about floating rate funds through jagoinvestor forum:

            I’ve invested in hdfc floating rate fund long term through sip πŸ™‚
            thanks srinivas for explaining this.


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

            1. manish says:

              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

            2. Jagbir says:

              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… πŸ™‚


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

            3. Srinivas says:

              The link from mutualfundindia.com explains how floating rate funds are less volatile than liquid funds. I am sharing here one more very informative article from VR. https://new.valueresearchonline.com/story/h2_storyView.asp?str=7520

              In jagbir’s case, his investment period was 18 months, which is not treated as long term hence equity is not suggested.

            4. Srinivas says:

              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.

  21. Krishna Kumar says:

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

    1) EPF
    2) Balanced Funds
    3) NPS

    1. manish says:

      Krishna

      Thanks for the comment πŸ™‚ . 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

      1. aditya modi says:

        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

        1. manish says:

          Aditya

          Good point . However still I didnt understand why you conculded that Silver is a better option than Gold ?

          Do you have access to GOLD prices in last 150 yrs . Can you please share the study / graphs ?

          Manish

          1. Srinivas says:

            for gold prices…refer https://www.measuringworth.org/gold/
            enter the starting year and end year…(right side).
            Yes. gold is a good option (I read your https://www.jagoinvestor.com/2008/04/gold-as-investment.html )
            Main problem is protecting the physical gold. I too think investing in gold ETFs and redeem and buy physical gold when you need it.

            1. Srinivas

              It looks like a great site .. I will surely see the site and come up with something πŸ™‚

              Manish

            2. Srinivas says:

              Thank you. But when you say ETF does it implicitly mean Index fund or Gold ETF?. I have been analyzing gold ETF but over a long period of 20 years gold ETFs returns cannot be more than 7%.

            3. manish says:

              Srinivas

              When I say ETF , it means Index ETF , not Index fund !! .

              There are ETF’s in market which tracks different indexes like Nifty , Nifty 500 .

              Regarding gold returns , yes .. over long term gold has not returned more than 7-8% .. Only in last 5 yrs gold has outperformed its history .

              Manish

            4. Srinivas says:

              Thanks. I was thinking Index fund is same as index ETF.
              By the way, which are the Index ETF available in India? Any links?

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