why are asset classes useful 
financial advisors focus on asset class as a way to help investors diversify their portfolios to maximize returns investing in several different asset classes ensures a certain amount of diversity in investment selections each asset class is expected to reflect different risk and return investment characteristics and perform differently in any given market environment the bottom linean asset class is a grouping of investments that exhibit similar characteristics and that may be subject to the same rules and regulations equities fixed income commodities and real estate are common examples of asset classes asset classes can be used to diversify portfolios and reduce risk as they are expected to reflect different risk and return characteristics for instance if stocks are falling bond prices may be rising and vice versa building a portfolio with asset classes that are not highly correlated with one another is an important concept for diversification 