Investment is filled with jargon and abbreviations that can be confusing for beginners. Learning some common investment abbreviations and acronyms can help you better understand investment news, research reports, financial statements and more. In this article, we’ll cover some of the most common abbreviated terms used in investing and explain what they mean.
There are many different types of investments with their own unique terminology. Stocks have ticker symbols like AAPL for Apple. Bonds are identified by terms like 10Y for 10-year US Treasury notes. Real estate investment trusts or REITs invest in commercial and residential properties. Mutual funds and ETFs use terms like NAV for net asset value. The list goes on and on.
Having a grasp of abbreviations shows your understanding of core investment concepts and topics. It also allows you to interpret financial data more efficiently rather than having to look up every other term. Here are some of the most essential abbreviated terms to know as an investor.
Common Stock Market Abbreviations
The stock market has its own unique language packed with abbreviations. Here are some examples:
EPS – Earnings per share, a key metric of company profitability
P/E – The price-to-earnings ratio compares a stock’s price to earnings per share
DPS – Dividends per share, the dividend payment made on each share outstanding
PEG – The price/earnings to growth ratio accounts for a stock’s projected earnings growth
ROE – Return on equity measures how efficiently a company generates profits from shareholders’ equity
These are just a few of the many metrics and ratios abbreviated in stock analysis and research reports.
Real Estate and REIT Abbreviations
Real estate has specialized terms like these:
REIT – Real estate investment trust, a company that owns and manages income-generating real estate
NOI – Net operating income, a property’s revenue minus operating expenses
CAP – Capitalization rate, net operating income divided by property value
LTCM – Loan to value ratio, the amount borrowed against a property over its total value
GLA – Gross leasable area, the total area available for tenant leasing
Learning real estate abbreviations helps you better evaluate properties, markets, and REIT investments.
Bonds and Fixed Income Abbreviations
Here are some common bond and fixed income abbreviations:
YTM – Yield to maturity, the total return assuming bonds are held to maturity
HY – High yield, bonds with credit ratings below investment grade
IG – Investment grade, bonds with credit ratings of BBB or higher
Duration – A measure of interest rate risk; longer duration means higher risk
Coupon – The interest rate paid on a bond
CAGR – Compound annual growth rate, the annual return with reinvested income
Knowing bond abbreviations allows you to compare terms, yields, and risks across fixed income assets.
Mutual Fund and ETF Abbreviations
Mutual funds and ETFs have many unique terms like:
NAV – Net asset value, the per share value of assets in a fund
AUM – Assets under management, the total market value of assets in a portfolio
MER – Management expense ratio, a fund’s total annual operating expenses
Tracking error – How much an ETF differs from its benchmark index
Alpha – Excess return relative to the market
Beta – Sensitivity to movements in the overall market
Learning fund abbreviations helps in comparing expenses, diversification, and performance.
Other Common Investment Abbreviations
Here are some other abbreviations that come up frequently:
SEC – Securities and Exchange Commission, the US markets regulator
ADR – American depositary receipt representing foreign company shares
LIBOR – The London Interbank Offered Rate benchmark interest rate
OTC – Over-the-counter securities traded off organized exchanges
FS – Financial statements like balance sheets, income statements, and cash flow statements
CFA – Chartered Financial Analyst, a professional credential for investment analysts
Knowing miscellaneous investing abbreviations gives broader context and familiarity with terminology.
Learning investment abbreviations and acronyms takes time, but being able to recognize these key terms will improve your ability to research, evaluate, and select investments. Start by focusing on abbreviations related to your particular areas of interest, be it stocks, bonds, real estate, or funds. Over time, you’ll develop a working knowledge of the most essential abbreviated investing jargon.