If you’re not familiar with FANG, the term is an acronym for Facebook, Inc. (FB), Amazon.com, Inc. (AMZN), Netflix, Inc. (NFLX), and Alphabet Inc. (GOOGL). Shares of these four companies have garnered a lot of interest from investors, as technology has been on a rampage thanks to relentless innovation, ecommerce, mobile devices, cloud computing, and streaming.
However, technology stocks have always been volatile, and it’s important to remember that growth companies often see many ups and downs. Nothing moves in a straight line.
- FANG is an acronym for four stocks: Facebook, Amazon, Netflix, and Google.
- Investors seeking to participate in FANG stocks can buy shares of exchange traded funds that hold shares of the technology companies.
- First Trust Dow Jones Internet, Invesco Nasdaq Internet, Invesco QQQ Trust, and First Trust ISE Cloud Computing ETF hold FANG stocks, but in different percentages.
- Looking at the basics and the details of an exchange traded fund can help determine if the ETF will help meet your investment goals.
If you want to invest in FANG stocks without having to concentrate your portfolio in only a few volatile stocks, consider an exchange traded fund (ETF) with exposure to the FANG stocks so you will be diversified. The four ETFs below offer FANG exposure, but not in equal amounts. Look at the basics of each fund to determine if one of them might fit your investment goals.
The First Trust Dow Jones Internet
The First Trust Dow Jones Internet (FDN) tracks the price and yield of the Dow Jones Internet Composite Index. In order for a stock to make it into this index, it must generate at least 50% of its revenue from the Internet.
FDN's FANG exposure (% of total assets) is as follows:
- FB: 6.64%
- AMZN: 9.61%
- NFLX: 5.60%
- GOOGL and GOOG: 7.96%
The Invesco Nasdaq Internet
The Invesco Nasdaq Internet (PNQI) tracks the price and yield of the Nasdaq Internet Index, which includes the most liquid U.S. Internet companies:
- Net assets: $459 million
- Expense ratio: 0.62%
- One-year performance: 2.70%
- Inception date: June 12, 2008
- Dividend yield: N/A
- Average daily trading volume: 46,900
PNQI's FANG exposure (% of total assets) is as follows:
- FB: 6.80%
- AMZN: 10.41%
- NFLX: 3.66%
- GOOG: 7.54%
The Invesco QQQ Trust
The Invesco QQQ Trust (QQQ) tracks the Nasdaq 100 Index, which includes 100 of the largest domestic and international non-financial companies listed on the Nasdaq Stock Market in terms of market capitalization:
- Net assets: $83.50 billion
- Expense ratio: 0.20%
- One-year performance: 14.9%
- Inception date: March 10, 1999
- Dividend yield: 0.85%
- Average daily trading volume: 57.6 million
QQQ's FANG exposure (% of total assets) is as follows:
- FB: 3.75%
- AMZN: 10.55%
- NFLX: 2.17%
- GOOGL and GOOG: 7.60%
The First Trust ISE Cloud Computing
- Net assets: $2.1 billion
- Expense ratio: 0.60%
- One-year performance: 2.3%
- Inception date: July 5, 2011
- Dividend yield: 0.45%
- Average daily trading volume: 1 million
Facebook and Netflix have since been removed from the ISE Cloud Computing Index.
SKYY's FANG exposure (% of total assets) is as follows:
- FB: 0%
- AMZN: 5.92%
- NFLX: 0%
- GOOGL: 4.27%
The Bottom Line
Three of the four exchange traded funds with FANG exposure have appreciated over the past year (all numbers current through April 17, 2020), and two offer a dividend yield.
On the other hand, only one has an expense ratio lower than the ETF industry average of 0.46%, which is the Invesco QQQ Trust at 0.20%. However, QQQ isn’t as specialized as the other niche funds. If you want specialization, then you might want to look at one of the other exchange traded funds with higher expense ratios.