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An ETF For The FANG Group Arrives

The FANG stocks – Facebook Inc FB 1.8%, Amazon.com Inc. AMZN 0.97%, Netflix, Inc. NFLX 2.07% and Google parent Alphabet Inc GOOG 1.15% – spend plenty of time in the limelight. These stocks are frequently tied to an array of exchange traded funds, namely Internet and technology funds.

However, there hasn't been a dedicated FANG ETF. That changed, sort of, Tuesday with the debut of the AdvisorShares New Tech and Media ETF FNG.

The actively managed FNG "seeks long-term capital appreciation by investing primarily in U.S. equities, and internationally through American depositary receipts (ADRs), of technology and technology-related companies including social media and internet retail companies within the information technology and consumer discretionary sectors. FNG employs a quantitative process to select equities in the ETF's portfolio, with a technical analysis overlay for entering and exiting individual positions in the portfolio," according to a statement from AdvisorShares.

As an actively managed ETF, FNG can move in and out of the FANG stocks and related fare and overweight or underweight those as the fund's managers see fit. Maryland-based AdvisorShares is one of the largest providers of actively managed ETFs.

Traditional FANG Plays

Obviously, Amazon and Netflix are half of the FANG quartet, but those companies aren't classified as technology companies. They're classified as consumer discretionary names, meaning investors that buy a traditional technology ETF or index fund are unlikely to find Amazon and Netflix among that fund's holdings.

Those industry classifications have helped drive investors to Internet ETFs, which often feature allocations to all four FANG stocks and at price tags significantly lower than the large numbers found on shares of Alphabet or Amazon. For example, the two largest Internet ETFs have nearly $5 billion in combined assets under management.

How FNG Works

“FNG’s investment thesis believes that high-performing technology and media leaders, popularly characterized as 'FANG,' will continue to provide superior long-term performance,” said AdvisorShares.

FNG's advisor, Sabretooth Advisors, can use fundamental and technical analysis to seek additional constituents for the ETF. The new ETF charges 0.85 percent per year, or $85 on a $10,000 investment.

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