The “ACBs” of the investment industry

The “ACBs” of the investment industry – Part I

Most people who are getting started in the investment funds industry are struck by the incredible number of confusing acronyms their coworkers tend to casually throw into conversation each day. It’s really quite remarkable how a new language must be acquired.

While many of us would just nod politely and pretend we actually know what they’re talking about, this blog article is meant to provide you with the names that these acronyms stand for – and a little bit about why they are so important.

This article is first in an ongoing series that will explain the most important investment industry acronyms so that you can join in on the conversation. And, by the way, “ACB” stands for “adjusted cost base,” in case you were wondering! 

ABS

No, not anti-lock brake system. Although those are important too. For us in the investment industry, ABS stands for asset-back security. ABSs are not mortgage-backed securities, although they are similar. Instead of real estate, however, ABSs are backed by corporate loans, leases, receivables, etc.

BRIC

BRICs are not what you see on the outside of houses. Rather, “BRIC” stands for Brazil, Russia, India and China. This block of countries is hugely important to the overall health of the global economy as it represents the biggest group of emerging market countries and billions of people. 

CPI

You’ll hear these three letters mentioned all the time. CPI, which stands for Consumer Price Index, is a key measure of inflation. If you want to keep track of, and learn more about, CPI, look no further than Statistics Canada, which keeps the most up-to-date info.

DJIA

The Dow Jones Industrial Average (DJIA) is an index made up of 30 blue-chip U.S.-based companies. It is one of the prime benchmarks of U.S. equity performance. Other key indices in the U.S. include the S&P 500 Index, which, as the name suggests includes 500 companies making it a broader performance benchmark, and the NASDAQ Composite Index, which has a tilt toward more information technology companies.

EFT

EFT stands for electronic funds transfer. When investors set up pre-authorized contribution plans (PACs), they typically do it through an automatic withdrawal from their bank account into the designated investment account (e.g. RRSP). EFT is an important acronym in our industry, and not to be confused with …

… ETF

The exchange-traded fund (ETF) market is growing rapidly. At one time, it was easy to define ETFs as passive investments, but the rise of active ETFs has made a simple definition more difficult. While the product offerings have expanded, some characteristics have remained: ETFs track an index or basket of securities and, unlike mutual funds, trade on an exchange.

Stay tuned for more essential investment industry acronyms!

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