An asset is something that can be invested in with the objective of financial gain. Groups of similar assets are known as asset classes. Different types of assets are generally associated with different levels of investment risk and the potential level of returns.
Assets aiming for growth
Growth assets, also known as return-seeking assets, are generally assets that aim to provide capital growth.
These types of assets can often have the potential for higher investment returns over the longer term, but they also tend to have higher investment risk and likelihood of their value rising and falling, either a little or a lot, in the short term.
- Shares relates to investment in companies listed in either Australian or international markets. Returns can come from capital growth or loss, i.e. the difference between the price of the shares when bought and sold, as well as any dividends paid to the shareholder from the company.
- Alternatives includes various investment strategies that access alternative return drivers. These strategies typically have a strong emphasis on providing diversification and focus on niche markets. Returns can come from a range of alternative return sources to the traditional asset classes, i.e. insurance, momentum, carry and value.
- Real Assets includes a combination of Australian and international property and infrastructure assets either owned directly or owned indirectly through listed or unlisted trusts. Unlisted property may include commercial and retail land and buildings. Unlisted infrastructure may include airports, electricity generation and transmission and toll-road assets. Returns can come from the change in value of the assets over time, and therefore potential sale price, and net income.
- Multi-Assets dynamically manages investments across a range of asset classes in response to changes in the respective investment managers’ investment market outlook. The mix of asset classes could include shares, fixed interest, high yield credit, listed infrastructure, absolute return strategies and cash. Returns can come from a range of sources, e.g. income returns and capital growth or loss from the mix of assets determined by the investment manager.
Assets aiming for income, or to control risk
Defensive assets, also known as income assets, are generally those that aim to provide income rather than capital growth.
These assets generally have lower investment risk, with more stable returns in the short term, but also generally have the potential for lower returns over the longer term.
- Cash includes investments in bank bills, short-term deposits with financial institutions or corporate promissory notes. Returns come from interest payments or any capital growth or loss if the asset is traded before maturity.
- Fixed Interest includes investments that usually represent loans to government or corporate organisations. Returns come from interest payments or any capital growth or loss if the asset is traded before maturity.