Best FANG Stocks ETFs for Q2 2021
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, dramatically outperformed the broader market during the past year.
- FANG stocks ETFs with the best 1-year trailing total return are QQQ, VUG, and IWF.
- The top holding of each of these ETFs is Apple Inc.
Despite its popularity and wide use among investors, the acronym "FANG" may be a bit out of date because Google has since renamed itself as Alphabet.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 "FANG" in this story.
The sectors for each of these companies provide a rough benchmark for comparison to the broader U.S. market, also illustrating their divergent characteristics. Facebook, Netflix, and Alphabet are in the communication services sector, which has posted a 29.3% 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 33.9%, 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 37.4% as measured by the Technology Select Sector SPDR ETF (XLK). All three of those sectors have significantly outperformed the S&P 500's 18.7% 1-year trailing total return.
When it comes to investing in FANG stocks ETFs, there are 22 funds that trade in the U.S. with good exposure to these four companies along with other stocks, excluding leveraged and inverse funds and those with under $50 million in assets under management. The best performing FANG stocks ETF is the Invesco QQQ Trust (QQQ). Below, we'll look at the best 3 FANG stocks ETFs as measured by 1-year trailing total returns. Performance figures above are as of February 5, and all other data are from February 8.
Invesco QQQ Trust (QQQ)
- 1-Year Trailing Total Return: 45.0%
- Expense Ratio: 0.20%
- Annual Dividend Yield: 0.53%
- 3-Month Average Daily Volume: 31,076,686
- Assets Under Management: $155.7 billion
- Inception Date: March 10, 1999
- Issuer: Invesco
The Invesco QQQ Trust tracks the Nasdaq 100 Index, which includes 100 of the largest domestic and international non-financial companies listed on the Nasdaq in terms of market capitalization. QQQ is structured as a unit investment trust (UIT) which offers a fixed portfolio as redeemable units to investors. The top holdings for QQQ include Apple, Microsoft, and Amazon.
Vanguard Growth ETF (VUG)
- 1-Year Trailing Total Return: 36.5%
- Expense Ratio: 0.04%
- Annual Dividend Yield: 0.64%
- 3-Month Average Daily Volume: 830,948
- Assets Under Management: $69.5 billion
- Inception Date: January 30, 2004
- Issuer: Vanguard
VUG is a large-cap growth fund with nearly 260 stocks that targets the CRSP US Large Cap Growth Index. The index offers exposure to hundreds of growth stocks across multiple sectors, although it skews toward technology companies. While growth stocks are higher-risk investments than some alternatives, they are typically favored for diversification, as part of a long-term investment strategy, or among investors seeking capital appreciation. The top holdings of VUG include Apple, Microsoft, and Amazon.
iShares Russell 1000 Growth ETF (IWF)
- 1-Year Trailing Total Return: 35.2%
- Expense Ratio: 0.19%
- Annual Dividend Yield: 0.64%
- 3-Month Average Daily Volume: 1,549,189
- Assets Under Management: $64.6 billion
- Inception Date: May 22, 2000
- Issuer: iShares
IWF is a large-cap growth fund that tracks the Russell 1000 Growth Index, which is comprised of growth stocks across multiple sectors, though weighted toward technology. IWF has about 450 holdings. The fund may appeal to investors looking for long-term strategies, diversification, or capital appreciation. The top holdings of IWF include Apple, Microsoft, and Amazon.
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