Know how NYSE FANG+ differs from Nasdaq 100 and how to invest in it.
On the back of a spectacular performance by the FAANG stocks, the Nasdaq indices still hold long-term promise for global investors. While Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), Google (GOOGL) are the heavyweights that investors still bank upon, there is the NYSE FANG+ index that investors may also consider while investing in international stocks.
NYSE FANG+ is the index that tracks the performance of highly-traded growth stocks of technology and tech-enabled companies in the technology, media & communications and consumer discretionary sectors.
But, what makes the NYSE FANG+ a unique offering, how is it different from Nasdaq 100 and how to invest in it? Let’s find out.
What makes NYSE FANG+ stand out is that it is an equal-dollar weighted Index and has 10 top global stocks in the index – Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), Google (GOOGL), Alibaba (BABA), Baidu (BIDU), NVIDIA (NVDA), Tesla (TSLA), Twitter (TWTR).
The NASDAQ-100 Index includes 100 of the largest domestic and international non-financial companies listed on NASDAQ Stock Market, is however, based on market capitalization.
As against NASDAQ 100 return of about 45 per cent over the last12-months, the NYSE FANG+ index is up nearly 70 per cent over the last one-year period.
Index Composition
The NYSE FANG+ index outpaces many of its peer indices and is one of the most highly correlated indices to technology and related stocks. Its underlying composition is equally weighted across all stocks, allowing for a more diversified and represented portfolio. Along with the FAANG STOCKS, it has stocks of 5 other tech-enabled companies.
Performance
The NYSE FANG+ Index continues to consistently outperform other key U.S. indexes and provides a viable risk management vehicle. The Index has returned a 32.96 per cent annualized total return from September 19, 2014 to May 28, 2021*, as compared to 21.06 per cent for the NASDAQ-100, 13.90 per cent for the S&P 500 and 22.99 per cent for the S&P 500 Information Technology Index.
*The NYSE FANG+ Index launched on 09/26/2017. Prior performance (09/19/2014 to 09/25/2017) is based upon backtested index calculations. Gross total return variants are shown for all of the indices in the chart. The NYSE FANG+ Index is an equal-weighted index, whereas the other indices represented in the chart above are weighted based upon market capitalization.
How to invest in NYSE FANG+ index
You can access the index through a MICRO NYSE FANG+ Index Futures contract but it may not be a feasible option for all retail investors. Therefore, there are ETFs through which one may take exposure in NYSE FANG+ Index.
According to etf.com, with 6 ETFs traded on the U.S. markets, NYSE FANG+ Index ETFs have total assets under management of $1.92B and the average expense ratio is 0.89 per cent.
- The largest NYSE FANG+ Index ETF is the MicroSectors FANG+ Index 3X Leveraged ETN FNGU with $1.57B in assets.
- In the last trailing year, the best-performing NYSE FANG+ Index ETF was FNGU at 273.34 per cent.
- The most recent ETF launched in the NYSE FANG+ Index space was the MicroSectors FANG+ ETN FNGS on 11/12/19.
Top ETFs to invest for exposure in FANG+ index
- MicroSectors FANG+ Index 3X Leveraged ETN
- MicroSectors FANG+ Index 2X Leveraged ETN
- MicroSectors FANG+ ETN
- MicroSectors FANG+ Index -3X Inverse Leveraged ETN
- MicroSectors FANG+ Index Inverse ETN
- MicroSectors FANG+ Index -2x Inverse Leveraged ETN
What to do
NYSE FANG+ gives you access to some of the top truly international stocks. The contribution of some of the top technology stocks in the performance of the leading US indices has been consistent and appears to grow in the time to come. While, the FAANG stocks still have the potential to grow in the post-covid world as and when the economy opens further, the FANG+ Index stocks can be considered for the long term.
As an investor, it is always better to diversify across asset classes and geographically. The ETF’s linked to NYSE FANG+ index gives you an opportunity to invest in global stocks at low-cost. However, as the exposure is concentrated in 10 big stocks, the risk-reward ratio is also high in it. Building a diversified portfolio helps rather than over allocating only the winners of today.
Disclaimer: The investing decision in these or any other stock should be taken on your own after carefully evaluating the business and other fundamentals of the company or after consulting one’s financial advisor. It is not a recommendation to buy, hold or sell in any of the stocks. Financial Express Online does not bear any responsibility for their investment advice.