In terms of the US stock market, FANG is an acronym for the NASDAQ-listed tech giants Facebook, Amazon, Netflix, and Alphabet Inc. (Google). The term was originally coined in 2013 by CNBC host Jim Cramer during his show ‘Mad Money’ and since then, has become a popular term among stock market analysts and investors to refer to these stocks to buy. In 2017, Apple, too was added to this list and hence you may hear people call it FAANG stocks.
Why do people want to invest in FANG stocks?
These five American tech behemoths are household names today and account for 19% of the S&P 500 as of August 2021. They vary significantly from each other in their business model; however, their performance has been prosperous with each of their stock seeing price increases of over 100% over the last 5 years. For instance, Amazon has seen stock-price increases of 500%. Owing to their extraordinary performance, they remain a popular investment choice among investors.
How did FANG stocks become popular?
Today, FANG stocks are representative of America’s corporate success. These companies need no introduction, as each of them has become such an indispensable part of our daily lives.
FANG stocks have been an attractive investment since the wave of digitalisation hit us almost two decades back. The emerging technologies, and their adoption by people, helped these companies make a stronghold among their customers initially.
With clear leadership and useful products, these stocks registered exceptional performance over the past years and were able to stay relatively non-volatile in the market, winning the confidence of people in the stock market.
FANG stocks have grabbed even more eyeballs last year during the COVID-19 pandemic, when people around the world were confined to their homes and their medium for work and entertainment got restricted to only online channels.
The health crisis led to a rise in the demand for mobile phones and OTT platforms such as Netflix and Amazon Prime, online purchase activities and a greater need for socialising. All this pushed the prices and the popularity of these FANG stocks further high.
How can Indians invest in FANG stocks?
According to the Reserve Bank of India’s (RBI) Liberalised Remittance Scheme, Indians can invest up to $250,000 in a year overseas. You can invest in these FANG stocks (and in other stocks listed abroad) via your stock market broking firm, if it offers trading services for companies listed in foreign countries. Since, the unit prices of these shares are on a higher end compared to domestically listed stocks, you can even choose to invest in less than a share of these companies through fractional investing. You can also invest in FANG stocks through international mutual funds.
Making an investment is a crucial decision and must be done only after thorough research and analysis. But if you want to save on the time and effort of figuring out what the right investment decisions are all by yourself, you can also seek professional advice.