Best FANG Stock ETFs

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.

Despite its popularity and wide use among investors, the acronym FANG may be a bit out of date because Google has since renamed itself Alphabet and Facebook has renamed itself Meta.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 -36.9% 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 -17.8%, 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 -16.8%, as measured by the S&P 500 Information Technology sector index.

All three of these benchmark indices have underperformed the broader market as represented by the S&P 500 in the past year. The S&P 500 has provided a one-year trailing total return of -13.2%.

There are 22 FANG stock ETFs that trade in the United States, excluding leveraged and inverse funds as well as those with under $50 million in assets under management (AUM). 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 Pacer Trendpilot 100 ETF (PTNQ). We examine the three best FANG stock ETFs below. All benchmark figures above and numbers below are as of Sept. 28, 2022. In order to focus on the funds' investment strategy, the top holdings listed for each ETF exclude cash holdings and holdings purchased with securities lending proceeds except under unusual cases, such as when the cash portion is exceptionally large.

Pacer Trendpilot 100 ETF (PTNQ)

• ^{Performance over one year: -9.8%}
• ^{Expense ratio: 0.65%}
• ^{Annual dividend yield: 0.14%}
• ^{Three-month average daily volume: 34,431}
• ^Assets under management: $666.4 million
• Inception date: June 11, 2015
• Issuer: Pacer Advisors

PTNQ tracks the Pacer NASDAQ-100 Trendpilot Index, an index composed of a combination of NASDAQ-100 securities and 3-month U.S. T-Bills based on momentum. When the NASDAQ-100 Total Return Index closes higher than its 200 day simple moving average (SMA) for five days in a row, PTNQ provides 100% exposure to the NASDAQ-100 index. When the NASDAQ-100 Total Return benchmark closes below that average for five straight days, PTNQ's portfolio adjusts to 50% exposure to that benchmark and 50% to its T-Bill allocation. And when the NASDAQ-100 benchmark's 200 day SMA closes lower than its value compared to five days earlier, PTNQ provides 100% T-Bill exposure.

PTNQ currently holds a significant T-Bill positionss as well as NASDAQ-100 securities. The top three stock holdings of the fund 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.

Invesco S&P 500 Top 50 ETF (XLG)

• Performance over one year: -14.6%
• Expense ratio: 0.20%
• Annual dividend yield: 1.00%
• Three-month average daily volume: 63,660
• Assets under management: $1.9 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. 37.1% of XLG's holdings are in the information technology sector, followed by healthcare, consumer discretionary, and communication services.

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

Global X NASDAQ 100 Covered Call ETF (QYLD)

• Performance over one year: -16.9%
• Expense ratio: 0.60%
• Annual dividend yield: 11.27%
• Three-month average daily volume: 4,163,429
• Assets under management: $6.4 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.

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