A. Based on modern portfolio theory, the best way to build an optimal portfolio is to include asset classes that don’t all behave in exactly the same way. The first step is to identify the major asset classes.
The table below shows the 12 major asset classes and their representative indexes -
Also noticable is that cash is part of a portfolio, why?
For readers who are interested in seeing more findings from a recent study, this financial planning magazine article is a good read.