Understanding basic asset classes

Basic asset classes (and also basic asset class combinations) reverse the perspective of asset classifications on asset positions by checking whether an asset position belongs to a specific category such as "equities". In the case of asset class splitting, this means that this question cannot simply be answered with "yes" or "no", but the proportion of the position that flows into the base asset class must be determined.

Basic asset class combinations consist of basic asset classes. An item belongs to a basic asset class combination if it belongs to all associated basic asset classes. In the case of asset class splitting, this means that the unit weights are multiplied by each other. Example: One fund has a 30% equity component and a 50% regional component "USA". The weighting of the basic asset class combination "Equities, USA" is then determined at 15%.

There is generally a close relationship between underlying asset classes and asset classifications. The names of basic asset classes are generally exactly what classification formulas provide. In order to make the results of classification formulas known in the system and thus be able to reference them in allocation models, they must be created individually. There are two ways of defining this:

• A reference to an asset classification refers to the weight that this classification assigns to an item in the base class name.
• An MM-Talk formula that calculates the weight of a position in the base asset class can also be specified directly. The decision values "True"/"False" ("Yes/No" or "True/False") are interpreted as 100% and 0% respectively.