Securities, Currencies, Contracts, Commodities, and Real Assets

Updated for the 2026-2027 CFA® Level I curriculum.

Organized markets trade five major asset groups: securities, currencies, contracts, commodities, and real assets. Each group has a distinct legal and economic structure, and the CFA Level I exam expects you to tell them apart from a short description. This note walks through what defines each group, their main subtypes, and how to classify an unfamiliar instrument quickly during the exam.

Key Takeaways About Securities, Currencies, Contracts, Commodities, and Real Assets

• Securities represent a claim on an issuer and split into fixed income and equity.

• Currencies are money issued by a monetary authority and traded for exchange rate exposure, not ownership.

• Contracts are agreements for a future exchange or payment, and most derivatives fall into this group.

• Commodities are physical, standardized goods traded in spot and derivative markets.

• Real assets are tangible and get their value from physical use, not from a contractual promise.

• Commodities are a type of real asset, but the exam treats them as a separate named category.

• Classification depends on the legal nature of the instrument, not the market where it trades.

What You Need to Know for CFA Level I

• Name the five major asset groups tested under this LOS.

• Describe the defining characteristic that separates each group from the others.

• Recognize the major subtypes within securities and contracts.

• Classify a described instrument correctly using its legal and economic features, not its label.

• Avoid confusing commodities with real assets or contracts with the securities that underlie them.

The Major Asset Groups Tested at Level I

Securities

A security is a transferable financial claim on an issuer. Buying a security gives you a legal right to either a fixed payment stream or a share of the issuer's residual value. Securities split into two families:

• Fixed income securities. These promise scheduled payments. Money market instruments mature in a year or less. Capital market instruments, such as bonds, have longer maturities.

• Equity securities. These represent ownership. Common stock carries voting rights and a residual claim on assets. Preferred stock has priority over common stock for dividends but usually no voting rights.

Currencies

A currency is money issued by a national monetary authority. Currencies serve as a medium of exchange, a unit of account, and a store of value. Investors trade currencies to speculate on exchange rate moves or to hedge foreign currency exposure, not to gain an ownership stake in anything.

Contracts

A contract is an agreement between two parties that obligates one or both sides to a future action. Most contracts derive their value from the performance of an underlying asset, rate, or index. Common types include:

• Forward contracts. A private agreement to exchange an asset at a set price on a future date.

• Futures contracts. A standardized, exchange-traded version of a forward contract.

• Swaps. An agreement to exchange cash flows, often based on interest rates or currencies.

• Options. A contract giving one party the right, but not the obligation, to buy or sell an asset.

• Insurance contracts. An agreement to pay a claim if a specified event occurs.

Commodities

A commodity is a physical, tangible good that is largely standardized regardless of who produces it. Commodities trade in three broad groups: agricultural products, energy products, and metals. Commodities trade in spot markets for immediate delivery and in derivative markets, such as futures, for future delivery.

Real Assets

A real asset is a tangible asset whose value comes from its physical properties and use, not from a contractual promise. Real estate, infrastructure, and equipment are common examples. Commodities technically fit inside this broader category, but the Level I curriculum lists commodities separately because they trade in their own organized markets with distinct pricing behavior.

Distinguishing Characteristics of Each Asset Group

Major Subtypes You Need to Know

• Fixed income securities: money market instruments and capital market instruments.

• Equity securities: common stock and preferred stock.

• Contracts: forward, futures, swap, option, and insurance contracts.

• Commodities: agricultural products, energy products, and metals.

• Real assets: real estate, infrastructure, and equipment.

How to Identify the Correct Category on the Exam

When a question describes an unfamiliar instrument, ask these questions in order:

1. Is it a claim on an issuer? If yes, it is a security. Check whether the payment is fixed (fixed income) or residual (equity).

2. Is it money issued by a government? If yes, it is a currency.

3. Does its value depend on a future action or another asset? If yes, it is a contract. Identify whether it is standardized (futures) or private (forward, swap).

4. Is it a physical, standardized good traded globally? If yes, it is a commodity.

5. Is it tangible and does its value come from direct use rather than a promise? If yes, and it is not a standardized commodity, it is a real asset.

This sequence resolves most exam descriptions because each question in the checklist eliminates one asset group at a time.

Worked Example

An analyst reviews four instruments in a client's account:

1. A three-month US Treasury bill.

2. A standardized agreement to deliver 1,000 barrels of crude oil in six months, traded on an exchange.

3. An ownership stake in a warehouse leased to a logistics company.

4. A holding of Japanese yen, purchased to hedge a supplier payment.

Step 1. The Treasury bill is a claim on the US government with a fixed, short-term payment. It is a fixed income security.

Step 2. The crude oil agreement is standardized, exchange-traded, and obligates future delivery. It is a futures contract, not a commodity itself, since the analyst holds the agreement rather than the physical oil.

Step 3. The warehouse stake is tangible and generates value from its use as leased property. It is a real asset.

Step 4. The yen holding is government-issued money held for exchange rate exposure. It is a currency position.

Interpretation. Each instrument fits a different asset group even though all four sit in the same account. The classification depends on the legal claim and value driver, not on the fact that all four are "investments."

Common Exam Traps

Treating a futures contract on oil as a commodity

The contract is a derivative whose value depends on the price of oil. The physical oil itself is the commodity. The contract belongs to the contracts group.

Assuming all real assets are commodities

Real estate and equipment are real assets but are not standardized, globally traded physical goods. Only a subset of real assets, such as agricultural or energy products, are commodities.

Classifying currency as a security

A currency is money, not a claim on an issuer's future payments or residual value. It does not belong in the securities group even though it trades in organized markets.

Labeling preferred stock as fixed income

Preferred stock pays a scheduled dividend, but it is an equity security because it represents an ownership claim, not a debt claim.

Practice Question

An investor enters into a private agreement with a grain processor to deliver 5,000 bushels of corn in four months at a price agreed today. The agreement is not exchange-traded and is negotiated directly between the two parties.

Which asset group best describes this agreement?

1. Commodity

2. Forward contract

3. Capital market security

FAQs About Securities, Currencies, Contracts, Commodities, and Real Assets