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 consumer cyclical to communication services to technology. But these stocks often are 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, an exchange traded fund (ETF) with exposure to the FANG stocks allows for greater diversification. 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, outperformed the broader market during the past year.
- The ETFs with the best 1-year trailing total return are XNTK, MILN, and IRBO.
- The top holdings of these ETFs are Applied Materials Inc., Home Depot Inc., and HengTen Networks Group Ltd., 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Despite its popularity and wide use among investors, the acronym "FANG" may be a bit out of date because Google has since renamed itself as Alphabet. Further, Apple Inc. (AAPL) is often added to create a five-stock group known by the term FAANG. In addition, some investors and analysts have 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 56.6% 1-year trailing total return, as measured by the performance of the Communication Services Select Sector SPDR ETF (XLC). Amazon is in the consumer discretionary sector, which has a 1-year trailing total return of 56.7%, based on the Consumer Discretionary Select Sector SPDR ETF (XLY). And Apple and Microsoft are in the tech sector, which has posted a 1-year return of 51.2% as measured by the Technology Select Sector SPDR ETF (XLK). All three of those sectors have significantly outperformed the S&P 500's 50.0% 1-year trailing total return, as of May 6, 2021.
When it comes to investing in FANG stocks ETFs, there are 22 funds that trade in the U.S. These funds offer good exposure to these four companies as well as other stocks. This grouping excludes leveraged and inverse funds as well as those with under $50 million in assets under management. The best-performing FANG stocks ETF, based on performance over the past year, is the SPDR NYSE Technology ETF (XNTK). We examine the 3 best FANG stocks ETFs below. All numbers below are as of May 10, 2021.
- Performance over 1-Year: 70.1%
- Expense Ratio: 0.35%
- Annual Dividend Yield: 0.33%
- 3-Month Average Daily Volume: 28,269
- Assets Under Management: $664.6 million
- Inception Date: Sept. 29, 2000
- Issuer: State Street SPDR
XNTK tracks the NYSE Technology Index, which is comprised of 35 leading U.S.-listed technology-related companies. The fund also is referred to simply as the NYSE Technology ETF. It provides exposure to technology-related companies primarily based in the U.S., but it also invests in companies based in China, Singapore, Canada, and a few other countries. The fund's biggest sub-industry allocation is in the semiconductor industry, followed by Internet and direct marketing retail, interactive media and services, 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, a multinational technology company and parent of Google; and Oracle Corp. (ORCL), a provider of software for enterprise information management.
- Performance over 1-Year: 69.8%
- Expense Ratio: 0.50%
- Annual Dividend Yield: 0.19%
- 3-Month Average Daily Volume: 55,041
- Assets Under Management: $187.9 million
- Inception Date: May 4, 2016
- Issuer: Global X
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. The fund's holdings primarily operate within the consumer discretionary, communication services, or information technology (IT) sector. MILN primarily invests in large-cap stocks with high potential for growth. Its top three holdings include Home Depot Inc. (HD), a home improvement retailer; Costco Wholesale Corp. (COST), a multinational company that operates a chain of membership-based big-box retail stores; and Lowe's Cos. Inc. (LOW), a home improvement retailer.
- Performance over 1-Year: 63.5%
- Expense Ratio: 0.47%
- Annual Dividend Yield: 0.51%
- 3-Month Average Daily Volume: 125,372
- Assets Under Management: $399.1 million
- Inception Date: June 26, 2018
- Issuer: iShares
IRBO tracks the NYSE FactSet Global Robotics and Artificial Intelligence Index, which is designed to represent the performance of global companies poised to benefit from the growth and innovation in robotics technologies and artificial intelligence (AI). The ETF provides exposure to global companies at the leading edge of robotics and AI innovation. About half of the fund's holdings are based in the U.S. and companies based in China and Japan comprise more than one quarter of the portfolio. The IT sector receives the largest weighting in the fund, followed by the communication and industrials sectors. IRBO is a multi-cap fund that follows a blended strategy of investing in a mix of growth and value stocks. Its top three holdings include HengTen Networks Group Ltd. (136:HKG), a China-based investment holding company that offers a variety of Internet and other services; Teradata Corp. (TDC), a database management company; and class A shares of MicroStrategy Inc. (MSTR), a provider of business intelligence, mobile software, and cloud-based services.
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