ETF Watch: New Fund Targets ‘FANG’ Stocks

July 12, 2017

Today AdvisorShares is rolling out an actively managed ETF that targets the group of stocks often referred to as the ‘FANG’ stocks—Facebook, Amazon, Netflix and Google—as well as other technology and media companies. The AdvisorShares New Tech and Media ETF (FNG) will be managed by Sabretooth Advisors via a quantitative stock selection process.

FNG comes with an expense ratio of 0.85% and lists on the NYSE Arca.

“Like how the industrial revolution brought a new era of economic growth and development, these disruptive innovators of FNG’s investment focus exemplify what is driving economic growth in the modern era,” said AdvisorShares CEO Noah Hamman of the launch.

“FNG provides efficient, concentrated exposure to one of the fastest-growing segments of the equity market while maintaining the ability to adapt to changing leadership in a rapidly evolving world—attributes we feel investors and advisors alike may find as an attractive investment solution, especially with the advantages of an actively managed ETF structure,” he added.

The Approach
The fund invests primarily in U.S. securities and American depositary receipts (ADRs), representing technology or technology-related companies; its scope includes firms operating in the fields of social media and internet retail. In addition to selecting stocks based on quantitative criteria, FNG’s managers will also rely on technical analysis to determine the timing of the purchase and sale of securities, the prospectus notes.

“It’s definitely tech- and media-focused, but it’s also certainly about a new Internet economy,” Hamman said.

Some of the quantitative criteria considered during the selection process include growth in market capitalization, forward guidance, momentum and technical levels, which can encompass moving averages, 52-week highs and lows, and charting techniques, according to the document.

Hamman says the fund can be used as part of a core allocation, noting that it offers long-only exposure, higher beta than the market and—as a result of that higher beta—higher volatility. FNG’s active management will also allow it to keep up with a continually evolving space more easily. Hamman points out that, previously, the leaders in the space covered by the fund would have been companies like IBM, Microsoft and AOL.

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