Stocks (equities or shares) issued by public companies are securities that are traded on stock exchanges. With an investment in stocks the buyer becomes a co-owner of part of a company. Stocks derive their yields in two different ways; firstly from the price movement of the stock, secondly in the form of the dividends paid. With passive asset allocation the investment is in a stock index which reinvests the dividends (Total Return).
Because the composition of a share index is adjusted as necessary, a „blue chip“ (leader of its industry) market index always contains the most important shares of the country or region in which it operates.
The equity asset class is characterised by large price movements (volatility). This leads to high returns but also high risks.
The Asset Allocation Analyzer uses a real equity index ETF which tracks the German DAX, including its back-calculation, to represent the equity asset class.