It has been said the large-cap active managers that are outperforming this year are doing so due to large positions in the FANG stocks:Facebook Inc. (NASDAQ:FB), Amazon.com Inc. (NASDAQ:AMZN), Netflix, Inc. (NASDAQ:NFLX) and Google parent Alphabet Inc. (NASDAQ:GOOG).
Perhaps it stands to reason that an actively managed exchange traded fund with a focus on FANG and related fare would prove to be a good idea. That's been the case with the AdvisorShares New Tech and Media ETF (NYSE:FNG), which is approaching its four-month anniversary.
FNG "seeks long-term capital appreciation by investing primarily in U.S. equities and internationally through American depository 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.
More Than Just FANG
Positioning as a FANG is compelling, but FNG is about much more than just the famous four stocks comprising the FANG quartet. At the end of the third quarter, Facebook, Amazon and Netflix were found among the ETF's top 10 holdings and comprised more than 22 percent of the fund's weight.
The ETF also provides representation to other popular technology sector acronyms, such as FAANG and FAAMG, as Apple Inc (NASDAQ:AAPL) and Microsoft Corp. (NASDAQ:MSFT) are also among FNG's top 10 holdings. Apple and Microsoft combined for 10.2 percent of FNG's weight at the end of the third quarter.
The portfolio manager seeks to identify additional constituents with similar characteristics using technical analysis, sampling and broad-based fundamental reviews to enhance the exposure of the portfolio, according to AdvisorShares.
This approach will be dynamic, enabling the portfolio management team to use a repeatable and scalable process that consistently seeks out the next industry leaders in technology and media as those faces change over time.
Sprinkling In Diversity
In addition to diversiftying outside of the FANG quartet, FNG offers some international exposure as well, with ex-U.S. stocks accounting for nearly a third of the fund's weight. Much of the ETF's ex-U.S. allocations are tied to high-flying Chinese internet stocks.
The strategy appears to be resonating with investors. FNG has returned more than 11 percent since coming to market, and the ETF has $36.7 million in assets under management, marking a decent start for an actively managed ETF.
2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.