FAANGs in 2020

I was watching the crawl on CNBC as I was eating breakfast this morning and happened to hear several of the presenters discuss the influence of the FAANGs on stock performance this year. Then I saw an article in the FT that said that the rise of index investing had funneled, in effect, too much money into large caps, making them outperformers without much regard to their merits. Of the FAANGs, I own only Netflix, so I decided to take a look. Year-to-date prices, as of about 10:30 est this morning:

the indices

S&P 500 +15.8%

NASDAQ +43.8%

FAANGs

AAPL +82.4%

AMZN +79.9%

NFLX +63.8%

FB +34.0%

GOOG +30.8%

under the media radar

ARK Innovation ETF, which owns none of the above +150%

Of the FAANGs, the real star is AAPL, whose two-year performance is up there with the ARK fund. In contrast, while AMZN has gotten a tremendous boost from the pandemic this year it trails NASDAQ by almost 30 percentage points on a two-year view.

I mention ARKW because it shows the power of original research, the fact that healthcare has been a key performance driver and that the real performance stars this year have been (as usually is the case) in less headline-catching names.

a note on risk

The ARK ETFs are not for everyone, however. The overall group has a narrow focus; the ETFs are highly concentrated, with the top ten positions in the Innovation ETF, for example, comprising just under half the fund; and what the firm considers to be key names can be top holdings in more than one ETF. So holders should be able to tolerate their higher than average level of risk.

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