Best FANG Stock ETFs for Q3 2022

XLG, RFFC, and QYLD are the best FANG Stock ETFs for Q3 2022

FANG is an acronym for four companies: Facebook (now named Meta Platforms, Inc.) (META), 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 because technology has driven their growth in areas such as e-commerce, mobile devices, cloud computing, and streaming entertainment.

Key Takeaways

  • FANG stocks, as represented by the technology, communication services, and consumer discretionary sectors, had a mixed performance relative to the broader market during the past year.
  • The FANG-themed exchange-traded funds (ETFs) with the best one-year trailing total returns are XLG, RFFC, and QYLD.
  • Apple Inc. is the top holding for all three ETFs.

Despite its popularity and wide use among investors, the acronym FANG may be a bit out of date because Google has since renamed itself Alphabet and Facebook has renamed itself Meta. Several variations have also emerged. Apple Inc. (AAPL) is often added to create a five-stock group known by the term FAANG. And 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 (Meta), Netflix, and Google (Alphabet) are in the communication services sector. That sector has posted a -18.1% 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 has a one-year trailing total return of -4.8%, based on the S&P 500 Consumer Discretionary sector index. Meanwhile, Apple and Microsoft are in the tech sector, which has posted a one-year trailing total return of 4.8%, as measured by the S&P 500 Information Technology sector index.

The consumer discretionary and communication services sectors have underperformed the S&P 500’s one-year trailing total return of 3.9%, while the information technology (IT) sector has outperformed, as of April 28, 2022.

There are 22 FANG stock ETFs that trade in the United States, excluding leveraged and inverse funds. These funds offer good exposure to the FANGs and other companies, even though they don't have specific strategies to hold FANG stocks. The best-performing FANG stock ETF, based on performance over the past year, is the Invesco S&P 500 Top 50 ETF (XLG). We examine the three best FANG stock ETFs below. All numbers below are as of April 28, 2022.

ETFs with very low assets under management (AUM), less than $50 million, usually have lower liquidity than larger ETFs. This can result in higher trading costs which can negate some of your investment gains or increase your losses.

Invesco S&P 500 Top 50 ETF (XLG)

  • Performance over one year: 5.4%
  • Expense ratio: 0.20%
  • Annual dividend yield: 1.00%
  • Three-month average daily volume: 81,440
  • Assets under management: $2.2 billion
  • Inception date: May 4, 2005
  • Issuer: Invesco

XLG tracks the S&P 500 Top 50 Index, which is composed of the 50 largest securities in the S&P 500 Index by market capitalization. Many of the mega-cap stocks in this fund may not experience tremendous growth, but the ETF is heavily tilted toward fast-growth companies. It's important to note that the ETF holds all six stocks in the FAAMNG group mentioned above and accounts for a large share of the portfolio. 38.5% of XLG's holdings are in the information technology sector, followed by healthcare, communication services, and consumer discretionary.

The top holdings of XLG include Apple Inc. (AAPL), a technology provider of personal computing and mobile devices, as well as services; Microsoft Corp. (MSFT), which sells consumer devices, software, and video game products and cloud services; and Amazon.com, Inc. (AMZN), an e-commerce, cloud services, and streaming entertainment provider.

RiverFront Dynamic US Flex-Cap ETF (RFFC)

  • Performance over one year: 4.9%
  • Expense ratio: 0.52%
  • Annual dividend yield: 0.93%
  • Three-month average daily volume: 6,794
  • Assets under management: $31.9 million
  • Inception date: June 6, 2016
  • Issuer: SS&C

RFFC is an actively-managed fund that does not follow an index. It invests in securities from small cap to large cap and includes securities selected for attributes including value, quality, and momentum. It uses a blended approach. Companies are evaluated based on factors including price-to-book (P/B) value, a company's cash as a percentage of its market capitalization, and relative strength to measure momentum. Information technology stocks make up 24.0% of the RFFC portfolio, followed by healthcare, financials, industrial, and consumer staples stocks.

The top holdings of RFFC include Apple, Microsoft, and Amazon, all described above.

Global X NASDAQ 100 Covered Call ETF (QYLD)

  • Performance over one year: 0.8%
  • Expense ratio: 0.60%
  • Annual dividend yield: 11.27%
  • Three-month average daily volume: 5,256,286
  • Assets under management: $6.9 billion
  • Inception date: Dec. 11, 2013
  • Issuer: Mirae Asset Global Investments Co. Ltd.

QYLD is a large-cap growth fund that seeks to provide investment results corresponding to the Cboe Nasdaq-100 BuyWrite V2 Index. The fund uses a covered call strategy in which it buys the stocks on the Nasdaq 100 index and then sells corresponding call options on the same index. The fund's managers say this strategy historically has generated higher yields in periods of volatility. The fund has made monthly distributions for eight straight years. This fund may be attractive to investors who want added yield without having to devote the time to get into options trading.

The top holdings of QYLD include Apple, Microsoft, and Amazon, all described above.

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. Though we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

Article Sources
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  3. Invesco. "Invesco S&P 500 Top 50 ETF."

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  5. SS&C ALPS Funds. "RFFC: RiverFront Dynamic US Flex-Cap ETF."

  6. ETF Database. "RFFC: RiverFront Dynamic US Flex-Cap ETF."

  7. Global X. "Nasdaq 100 Covered Call ETF."

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