Best FANG stock ETF for the first quarter of 2022

FANG is an acronym for four companies: Facebook (now renamed Meta Platforms Inc.) (FB), Amazon.com Inc. (AMZN), Netflix Inc. (NFLX) and Alphabet Inc. (GOOGL). These companies represent a variety of different industries, from communications services to technology to consumer discretionary goods, but because they have historically been one of the fastest-growing, most innovative, and most successful large companies in the world, they are often classified as One group.

For investors who seek to invest in the FANG group without having to concentrate their portfolio on a few volatile stocks, an exchange-traded fund (ETF) with the theme of FANG may be the best choice. These four companies have attracted strong interest from investors because technology has promoted their growth in areas such as e-commerce, mobile devices, cloud computing, and streaming media entertainment.

Key points

  • FANG stocks represented by the technology, communications services and consumer discretionary industries have performed mixed relative to the broader market in the past year.
  • The ETFs that track the best total returns in a year are SKYY, XNTK, and VOOG.
  • The largest holdings of these ETFs are DigitalOcean Holdings Inc., NVIDIA Corp. and Apple Inc. respectively.

Although it is popular and widely used among investors, the acronym FANG may be a bit outdated because Google has renamed itself Alphabet, and Facebook has renamed itself Meta. Several variants have also appeared. Apple Inc. (AAPL) is often added to create a five-share stock group known by the term FAANG. Some investors and analysts even added Microsoft Corporation (MSFT) to a six-share group called FAAMNG or FAAMNGs. For simplicity, we will use the original FANG acronym in this story.

Each company’s industry provides a rough benchmark for comparison with the broader U.S. market, and at the same time illustrates their different characteristics. Facebook (Meta), Netflix and Google (Alphabet) are all in the field of communication services. Based on the performance of the Standard & Poor’s 500 Communications Services Industry Index, the industry’s one-year total return rate is 32.9%. On the other hand, Amazon belongs to the consumer discretionary industry. According to the S&P 500 Consumer Discretionary Industry Index, the industry’s one-year tracking total return rate is 31.6%. At the same time, Apple and Microsoft in the technology industry, measured by the Standard & Poor’s 500 Information Technology Industry Index, the industry’s one-year total return rate is 39.6%. As of November 9, 2021, the performance of the consumer discretionary and communications service industries was below the S&P 500’s one-year tracking total return rate of 33.9%, while the information technology industry performed better than the broader market.

There are 22 FANG stock ETFs traded in the United States, excluding leveraged and inverse funds and funds with assets under management (AUM) of less than US$50 million. These funds provide good investment opportunities for the four FANG companies and other stocks. Based on the performance of the past year, the best performing FANG stock ETF is First Trust Cloud Computing ETF (SKYY). We have checked the three best FANG stock ETFs below. All figures below are as of November 8, 2021.

  • Performance over one year: 41.4%
  • Expense rate: 0.60%
  • Annual dividend yield: 0.15%
  • Three-month average daily volume: 225,108
  • Assets under management: US$6.9 billion
  • Date of establishment: July 5, 2011
  • Issuer: First Trust

SKYY is a multi-share growth fund targeting the ISE CTA cloud computing index. The index tracks the performance of companies involved in the cloud computing industry. To be included, the company must be classified as a cloud computing company by the Consumer Technology Association and must have a market capitalization of at least $500 million, among other parameters. Nearly half of the fund’s assets are concentrated in IT service companies, while technical hardware, storage and peripherals account for more than 25%.

SKYY’s largest holdings include cloud infrastructure provider DigitalOcean Holdings Inc. (DOCN); Arista Networks Inc. (ANET), a computer networking company; and the Class A shares of database software company MongoDB Inc. (MDB).

  • Performance over one year: 38.4%
  • Expense rate: 0.35%
  • Annual dividend yield: 0.27%
  • Three-month average daily volume: 10,244
  • Assets under management: $772.8 million
  • Date of Establishment: September 25, 2000
  • Issuer: State Street

XNTK tracks the New York Stock Exchange Technology Index, which is composed of 35 leading technology-related companies listed in the United States. The fund, also referred to as NYSE Technology ETF, mainly invests in technology-related companies in the United States, but also invests in companies in China, Singapore, Canada, and Taiwan. XNTK’s largest sub-industry is configured in the semiconductor industry, followed by system software, the Internet, and direct retail, as well as a series of other technology-related industries.

XNTK is mainly a large fund that focuses on investing in companies with high growth potential. Its top three holdings include graphics processing unit and chip manufacturer NVIDIA Corp. (NVDA); Tesla Inc. (TSLA), an electric vehicle and clean energy company; and sponsors Sea Ltd, a global consumer internet company headquartered in Singapore . (SE) ADR.

  • Performance over one year: 36.6%
  • Expense rate: 0.10%
  • Annual dividend yield: 0.60%
  • Three-month average daily volume: 106,641
  • Assets under management: US$7.5 billion
  • Date of establishment: September 7, 2010
  • Publisher: Pioneer

VOOG is a large growth fund that targets stocks in the S&P 500 Growth Index. Information technology companies accounted for more than 41% of the fund’s portfolio, while communications service companies accounted for 15.5%. VOOG’s top 10 positions account for more than half of all investment assets, and the vast majority of these 10 stocks are IT or communication services. VOOG’s top three holdings include Apple, Microsoft and Amazon.

The comments, opinions and analysis expressed here are for reference only and should not be regarded as personal investment advice or advice on investing in any securities or adopting any investment strategy. Although we believe that the information provided here is reliable, we do not guarantee its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Due to the rapidly changing market and economic conditions, all comments, opinions and analyses contained in our content are presented on the date of publication and may change without notice. This material is not intended to provide a complete analysis of every important fact about any country, region, market, industry, investment or strategy.

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