What is A
BREAKING DOWN A
A generally occurs as the last letter in stock tickers to denote Class A shares of the security, and to differentiate those shares from other classes released by the firm. Different exchanges treat the suffix in different ways. Tickers on the New York Stock Exchange and the Toronto Stock Exchange (TSX) append a dot between the ticker and any additional alphanumeric codes to identify the various classes of a security available to investors. Nasdaq, which generally uses four-letter ticker symbols, appends the same information as a fifth alphanumeric digit at the end of the ticker, without the dot.
Note that NYSE also issues one- and two-letter ticker symbols. For example, Agilent Technologies trades under the symbol A, and Alcoa Corporation trades under the symbol AA. Furthermore, not all firms issue multiple classes of common stock. The presence of different systems for constructing tickers makes it important that investors check carefully to ensure the name and class of the stock they intend to purchase corresponds with the ticker used to identify if on a given exchange.
Stock Share Classes
Share classes distinguish different rights afforded to investors who purchase a company’s common stock. When companies break their common shares into classes, they usually do so to distinguish the voting rights afforded to purchasers of each class. Class A shares commonly retain more voting rights than other share classes, but no specific rule requires this treatment. In other words, nothing technically stops a company from issuing Class B shares which confer more voting rights than Class A shares, so as always, wise investors should take care to understand exactly what they intend to buy. Companies may also issue shares without any voting rights at all.
While different share classes do not usually confer differentiated rights in areas other than voting, preferred shares offer investors higher priority with regard to dividend payments and liquidation or bankruptcy settlements.
Mutual Fund Share Classes
Like stocks, mutual funds use multiple share classes. Unlike stocks, however, mutual fund classes usually indicate a difference in the way the fund apportions fees to different shareholders. Class A mutual funds, also known as A-shares, usually carry an up-front sales charge paid to a broker. This load reduces the number of shares purchased by a corresponding amount. Other share classes defer fees in one way or another, usually by spreading them out over time.