FANG is an acronym for Facebook Inc. (FB), Amazon.com Inc. (AMZN), Netflix Inc. (NFLX), and Alphabet Inc. (GOOGL). These companies represent a variety of different sectors, ranging from communication services to technology to consumer discretionary, but are often grouped together because they historically have been among the fastest-growing, most innovative, and most successful large companies in the world.
For investors seeking exposure to the FANG group without having to concentrate a portfolio in a few volatile stocks, a FANG-themed exchange-traded fund (ETF) might represent the best option. These four companies have attracted intense interest from investors as technology has driven their growth in areas such as e-commerce, mobile devices, cloud computing, and streaming entertainment.
- FANG stocks, as represented by the tech, communication services, and consumer discretionary sectors, had a mixed performance relative to the broader market during the past year.
- The ETFs with the best one-year trailing total return are MILN, XNTK, and GVIP.
- The top holdings of these ETFs are Intuit Inc., Applied Materials Inc., and Salesforce.com Inc., respectively.
Despite its popularity and wide use among investors, the acronym FANG may be a bit out of date because Google has since renamed itself Alphabet. Several different variations have also emerged. Apple Inc. (AAPL) is often added to create a five-stock group known by the term FAANG, while some investors and analysts have even added Microsoft Corp. (MSFT) to make a six-stock group called FAAMNG, or the FAAMNGs. For simplicity, we'll use the original FANG acronym in this story.
The sectors for each of these companies provide a rough benchmark for comparison to the broader U.S. market while illustrating their divergent characteristics. Facebook, Netflix, and Alphabet are in the communication services sector, which has posted a 43.7% one-year trailing total return, as measured by the performance of the S&P 500 Communication Services Sector Index. Amazon, on the other hand, is in the consumer discretionary sector, which based on the S&P 500 Consumer Discretionary Sector Index has a one-year trailing total return of 27.5%. Meanwhile, Apple and Microsoft are in the tech sector, which has posted a one-year trailing total return of 36.2%, as measured by the S&P 500 Information Technology Sector Index. The consumer discretionary sector has underperformed the S&P 500's one-year trailing total return of 35.2%, while the technology and communication services sectors have outperformed, as of Aug. 2, 2021.
There are 22 FANG stock ETFs that trade in the U.S., excluding leveraged and inverse funds as well as those with under $50 million in assets under management (AUM). These funds offer good exposure to the four FANG companies as well as other stocks. The best-performing FANG stocks ETF, based on performance over the past year, is the Global X Millennial Consumer ETF (MILN). We examine the three best FANG stock ETFs below. All numbers are as of Aug. 2, 2021.
- Performance Over One-Year: 49.2%
- Expense Ratio: 0.50%
- Annual Dividend Yield: 0.13%
- Three-Month Average Daily Volume: 33,823
- Assets Under Management: $220.2 million
- Inception Date: May 4, 2016
- Issuer: Mirae Asset Global Investments Co., Ltd.
MILN tracks the Indxx Millennials Thematic Index, which is designed to gauge the performance of U.S. stocks poised to benefit from the rise of the millennial generation. The ETF aims to provide exposure to companies that are likely to benefit from the increasing spending power and unique preferences of the U.S. millennial generation, the generation of people whose birth years range from 1980 to 2000 (by the fund's specific definition).
The fund primarily invests in large-cap, high-growth-potential stocks that operate in the consumer discretionary, communication services, or information technology (IT) sectors. Its top three holdings are Intuit Inc. (INTU), a financial software company; Class B shares of Nike Inc. (NKE), the maker of footwear, apparel, and related merchandise; and Class A shares of Alphabet Inc.
- Performance Over One-Year: 48.0%
- Expense Ratio: 0.35%
- Annual Dividend Yield: 0.27%
- Three-Month Average Daily Volume: 14,848
- Assets Under Management: $712.8 million
- Inception Date: Sept. 25, 2000
- Issuer: State Street
XNTK tracks the NYSE Technology Index, which is comprised of 35 leading U.S.-listed technology-related companies. The fund, which is also referred to simply as the NYSE Technology ETF, provides exposure to technology-related companies primarily based in the U.S., although it also invests in companies based in China, Singapore, Canada, and Taiwan. XNTK's biggest subindustry allocation is in the semiconductor industry, followed by interactive media and services, Internet and direct marketing retail, and a range of other technology-related industries.
XNTK is primarily a large-cap fund focused on investing in companies with high growth potential. Its top three holdings include Applied Materials Inc. (AMAT), a supplier of equipment, services, and software for the manufacture of semiconductor chips; Class A shares of Alphabet; and NVIDIA Corp. (NVDA), a maker of graphics-processing units and chips.
- Performance over One-Year: 43.5%
- Expense Ratio: 0.45%
- Annual Dividend Yield: 0.12%
- Three-Month Average Daily Volume: 11,629
- Assets Under Management: $219.2 million
- Inception Date: Nov. 1, 2016
- Issuer: Goldman Sachs
GVIP tracks the Goldman Sachs Hedge Fund VIP Index, which aims to imitate the investments of top hedge funds. The fund screens publicly available data from select hedge funds and targets stocks included in the top 10 holdings of those portfolios. GVIP maintains a portfolio of roughly 50 holdings.
GVIP is unique among low-cost ETFs in that it aims to duplicate the successes of much more expensive, actively managed funds. The top holdings of GVIP include Salesforce.com Inc. (CRM), a cloud-based customer relationship management (CRM) service provider; Class A shares of Carvana Co. (CVNA), an online used car retailer; and Class A shares of Square Inc. (SQ), a payment services provider.
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