Don’t Let Alphabet Soup Define Your Alpha Bets

Our world is filled with catchy acronyms and abbreviations. Perhaps it’s our quest for efficiency, or maybe it’s our desire to be part of a select club that knows the secret codes, but many of these little ciphers are now part of normal parlance. BRB, LMK, LOL are all very common and even the iconic dictionary brands have recently added DEI, MAGA and AI to their pages to offer a window into the world today.

The investment community is certainly no stranger to these collections of creatively organized letters. Wall Street loves little phrases, slogans and sayings to portray understanding, proficiency and, above all, acceptance into the “cool” crowd. Bulls, bears, hawks, doves, black swans, dead cats, unicorns, whales and wolves. Are you going to buy the dip, pump and dump, or do you have diamond hands and will HODL the SPAC? Did you get in on the NASDAQ-listed REIT IPO with DRIP? Just buy the NFT ETF so you don’t get FOMO, YOLO!

Some of these acronyms are used to corral specific countries. Most of us can guess the nations included in BRICS, but do you remember these from decades past: PIGS and MINT? Extra credit if you remember this one: CIVETS?

Countries groupings were popular for a while and then the industry got very excited with clever plays on groups of specific stocks. CNBC helped popularize the investment media movement and longtime host Jim Cramer is credited with coining the term FANG to showcase the collective strength and popularity of the stocks of Facebook, Amazon, Netflix and Google. The FANGs sunk their teeth into Apple a few years later, and the acronym grew to FAANG and, of course, now the evolved collection is referred to as the Mag. 7, with the addition of Tesla, Microsoft and Nvidia.

Between FANG and the Mag. 7, these other collections each had their 15 (or less) minutes of fame:

FATMAN

FAATMANN

BATMAN

BATMAAN

MAMAA

MNM

MANGO

Even non-U.S. markets tried to get involved: A few Chinese companies were called BAT (no COVID jokes please) and my personal favorite, the European stocks that made up GRANOLAS, which reminds me of my earlier trading days and our quest for OATS (Order Audit Trail System) compliance.

The point of this orthographical trip down memory lane is to showcase that some of these acronyms we have adopted into our lexicon are just clever and creative ways for us to contain or market investment themes. They are a product of returns, made to fit a purpose or an outcome and used for marketing.

The bigger point is that investors today can choose their own collections of investments. The tools, data, analytics and providers are available to create the bespoke methodologies that fit the unique goals and objectives that each individual asset owner desires. No longer are the choices confined to what is available “on the shelf”; if the exposure you are looking for doesn’t exist, then create it.

The indexing industry has grown significantly over the past few decades as investors were drawn to the transparent, rules-based and often lower-cost frameworks built on economies of scale. The number of investable indexes has ballooned into the millions — but it doesn’t need to stop there. Investors can now write their own story, and maybe the industry can coin a new acronym; IFO (Index For One)…

Here are the definitions to the above acronyms but, IYKYK:

BRICS: Brazil, Russia, India, China, South Africa

PIGS: Portugal, Italy, Greece, Spain

MINT: Mexico, Indonesia, Nigeria, Turkey

CIVETS: Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa

Mag. 7: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, Tesla

FA(A)NG: Facebook, Apple, (Amazon), Netflix, Google

MANGO: Meta, Apple, Nvidia, Google, OpenAI (eventually)

MAMAA: Meta, Apple, Microsoft, Amazon, Alphabet

BATMMAAN: Broadcom, Apple, Tesla, Meta, Microsoft, Amazon, Alphabet, Nvidia

FAATMANN: Facebook, Alphabet, Amazon, Tesla, Microsoft, Apple, Netflix, NVIDIA

MNM: Microsoft, Nvidia, Meta

BAT: Baidu, Alibaba, Tencent

GRANOLAS: GlaxoSmithKline, Roche, ASML, Nestle, Novartis, N(O)vo Nordisk, L’Oreal, LVMH, AstraZeneca, SAP, Sanofi