DIY FAANG 2.0 . wallet

DIY FAANG 2.0 . wallet

Pay attention to FAANG, here comes FAANG 2.0, and it has nothing to do with Facebook.

Strive Asset Management, the recent “anti-wake-up” ETF issuer Submit a flyer For an ETF that will invest in fuels, aerospace, agriculture, nuclear power, and gold.

This is FAANG 2.0, a departure from the original FAANG created by CNBC host Jim Cramer who identified the fast-growing internet companies: Facebook (now Meta Platforms Inc.) and Apple Inc. and Amazon.com Inc. and Netflix Inc. and Alphabet Inc.

The original FAANGs took off during the pandemic when people stuck at home turned to the internet due to COVID-19 that prevented them from working, shops and restaurants.

Earlier this year, with shares of original FAANG inflamed and US stocks sliding into a bear market, Bank of America began touting FAANG 2.0 based on industries expected to see strong growth rather than individual companies.

The Strive FAANG 2.0 ETF may not launch until next year, and when it does, the prospectus says it will hold approximately 50 securities – which means 10 securities to represent each industry. The document does not indicate the expected expense ratio.

In the meantime, investors may consider building their own FAANG 2.0 portfolio from existing ETFs. Creating a diversified and relatively low-cost portfolio may not be complicated.

fuel

while the SPDR ETF (XLE) Energy Sector Selection As the obvious choice might seem, her 23 collectibles may not have the versatility needed. Investors may wish to consider Fidelity MSCI Energy Index ETF (FENY)which, at 0.08%, is two basis points cheaper than XLE and provides exposure to 116 companies.

FENY’s $1.6 billion in assets are minuscule compared to XLE’s roughly $42 billion in assets, but it should still not pose liquidity issues for buy-and-hold investors. They both have a penny spread, and the average spread in percentage terms is 0.05% for FENY and 0.01% for XLE.

space and defense

Three ETFs with more than $1 billion in assets cover the aviation sector. The largest is $3.9 billion iShares US Aerospace & Defense ETF (ITA)which costs 0.39%. $1.2 billion SPDR S&P Aerospace & Defense ETF (XAR) It is the cheapest at 0.35%. The ITA shows exposure to 39 securities, compared to 34 in the XAR portfolio. ITA has also performed significantly better than XAR, yielding a positive 1% YTD return versus a ~12% decline in XAR.

$1.5 billion Invesco Aerospace & Defense ETF (PPA) It has exposure to a portfolio of 56 stocks and is up 2% year-to-date, but has an expense ratio of 0.61%, lower trading volume and wider spreads than an ITA.

Farming

The obvious choice for the cultivation area may be 1.4 billion dollars VanEck Agribusiness ETF (MOO). The fund has been around since 2007, and so far this year it has lost 7.64%, well below the broader global stock markets.

Investors may also want to consider $303.4 million iShares MSCI Global Agricultural Producers ETF (VEGI), since it has better performance (over 6% YTD) and an expense ratio of 0.39%, cheaper than the 0.52% charged by MOO. Despite being much smaller, the trading volume and price differentials for the two funds are not much different.

nuclear

While there are quite a few options for an ETF that covers the nuclear industry, the largest is priced among the cheapest and most expensive funds in the arena, at 0.69%. $1.6 billion Global X Uranium ETF (URA) Covering 47 holdings, it offers the broadest coverage in the space, as well as significant liquidity.

Gold and other metals

The last pillar of FAANG 2.0 may be better represented by $1.9 billion SPDR S&P Metals & Mining ETF (XME), which allows exposure to miners of precious and industrial metals. The fund comes with an expense ratio of 0.35%. Her portfolio includes 36 holdings.

last thoughts

The five ETFs that can be selected to represent each of the FAANG 2.0 categories, if equally weighted, provide an average expense ratio of approximately 0.45%. This is not at all outrageous for a sector/industry fund portfolio, although there is some extra work if one wants to rebalance to this equal weighting periodically.

In terms of performance, the SPDR S&P 500 ETF Fund (SPY) It fell nearly 19% last week, while four of the five FAANG 2.0 portfolio ETFs were in positive territory. Funds in the portfolio saw year-to-date returns as of last Wednesday ranging from -7.5% (URA) to 64.7% (FENY). This average return on the five funds in the portfolio was 15.1%, which is very attractive for the broad market.

Contact Heather Bell at heather.bell@etf.com

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