The definition for the term Asset Class refers to a broad investment category consisting of financial assets with similar attributes. Investors and advisors are encouraged to have and gain knowledge about all financial classes it is necessary for a good client/advisor relationship to understand these concepts along with a keen understanding for their time limits and horizon. It is important to gain new knowledge and it may be more important to re-learn the basics at a time that all mutual funds and their classifications have changed to a more simple and agreed standard format. Understanding mutual funds in Canada can take up quite some time in research and review, the best time to learn the new system is now after all the governing bodies and rule makers have concurred to agree, manage and maintain best practices. Every novice investor, new immigrant, advisor or savvy investment client will benefit by knowing the underlying mechanism of buying selling and trading Canadian mutual funds to achieve some long-term investment goals. Mutual Fund Investors should invest the time in knowing how mutual funds work in the world of Canada's capital markets. Investors should empower themselves with education in any event and when money is on the line it is best to move forward with caution, checks and balances.
Proper Asset Allocation is is so important, some call it re-balancing some call it second opinion and others call it a portfolio review. Depending on the their financial goals, risk tolerance and current market conditions. Most investors prefer to invest in more than one asset class, for diversification purposes. There are 10 major Mutual Fund Asset Classes in Canada and 53 individual Mutual Fund Categories to invest in with close to 85 mutual fund companies and money management firms serving up to 2000 independent funds to the investment marketplace. Knowing and exploring each individual fund from the top 10 Asset Classes and Mutual Fund Categories and Mutual Fund Sectors allows the investor to understand important general philosophies and strategies but empowers them to take a participative roll in making a difference in their overall wealth and management of assets. All mutual funds are collective investment schemes with a mandate, obligation or objective in investing in certain geographic, established or emerging markets and other specialty areas. The three main asset classes are equities (stocks), fixed-income (bonds) and cash equivalents, money market instruments.It should be noted that in addition to the three main asset classes, some investment organizations and governing bodies would add real estate and commodities, and possibly other types of investments, to the asset class mix. It does not matter about the asset class portfolio you use, each one is expected to reflect different risk and return investment characteristics, and will perform differently in any given market environment. The Mutual Fund Asset Class strategy can be employed in some instance with great success and it is primarily used for the purpose of further market exposure and diversification.