Real assets is an investment asset class that covers investments in physical assets such as real estate, energy, and infrastructure. Real assets have an inherent physical worth. Real assets differ from financial assets in that financial assets get their value from a contractual right and are typically intangible.
Real assets are categorized into three categories:
A financial asset is a non-physical asset whose value is derived from a contractual claim, such as bank deposits, bonds, and participations in companies' share capital. Financial assets are usually more liquid than tangible assets, such as commodities or real estate.
The opposite of financial assets is non-financial assets, which include both tangible property (sometimes also called real assets) such as land, real estate or commodities, and intangible assets such as intellectual property, including copyrights, patents, trademarks and data.
A non-financial asset is an asset that cannot be traded on the financial markets and whose value is derived by its physical net worth rather than from a contractual claim, as opposed to a financial asset (e.g., stock, bonds). Non-financial assets may be tangible (also known as real assets, e.g., land, buildings, equipment, and vehicles) but also intangible (e.g., patents, intellectual property, data).
Non-financial assets can be further divided into produced assets (fixed assets, inventories, and valuables) and non-produced assets (natural resources, contracts, leases and licenses, and goodwill and marketing assets).
Investment management (sometimes referred to more generally as financial asset management) is the professional asset management of various securities, including shareholdings, bonds, and other assets, such as real estate, to meet specified investment goals for the benefit of investors. Investors may be institutions, such as insurance companies, pension funds, corporations, charities, educational establishments, or private investors, either directly via investment contracts/mandates or via collective investment schemes like mutual funds, exchange-traded funds, or Real estate investment trusts.
The term investment management is often used to refer to the management of investment funds, most often specializing in private and public equity, real assets, alternative assets, and/or bonds. The more generic term asset management may refer to management of assets not necessarily primarily held for investment purposes.
In finance, an asset class is a group of marketable financial assets that have similar financial characteristics and behave similarly in the marketplace. These instruments can be distinguished as either having to do with real assets or having to do with financial assets. Often, assets within the same asset class are subject to the same laws and regulations; however, this is not always true. For instance, futures on an asset are often considered part of the same asset class as the underlying instrument but are subject to different regulations than the underlying instrument.
Many investment funds are composed of the two main asset classes, both of which are securities: equities (share capital) and fixed-income (bonds). However, some also hold cash and foreign currencies. Funds may also hold money market instruments and they may even refer to these as cash equivalents; however, that ignores the possibility of default. Money market instruments, being short-term fixed income investments, should therefore be grouped with fixed income.