There are four main asset classes which provide varying degrees of risk and returns and should be considered when determining your investment strategy.
The table below highlights the characteristics, risk and return for these asset classes.
| Asset class | Characteristics | Risk | Potential return |
|
Cash includes bank deposits, cheque accounts & cash management trusts |
Lowest level of risk and lowest level of return of all asset classes over the long term. Suitable for investors who have a short-term outlook or low tolerance to risk. |
Low | Low |
|
Fixed interest includes Government bonds, fixed term deposits, mortgage trusts |
Fixed interest is more volatile than cash, but can still be a relatively stable asset class. |
Low/ Moderate | Moderate |
|
Property includes residential, industrial and commercial property |
Has a higher risk than fixed interest, but less risk than equities (shares) |
Moderate/ High | Moderate/ High |
|
Equities (shares) involves the purchase of a stake or financial interest in a company, enabling you to share in the profits and future growth of that company |
The most volatile asset class, but over long periods of time has achieved (on average) higher returns. Investment sectors within this class include Australian equities and international equities. |
High | High |
These asset classes can be described in various ways by different funds and there may be other assets (e.g. non-traditional assets like private equity, infrastructure and hedge funds) used in an investment option.
