ARTICLES

In mid-2020, when the global lockdown was at its peak, the term ‘FAANG’ stocks started becoming popular on google search. Most of the searches were from Asia, and India was not behind. So, what is this FAANG or why it became so popular amidst the Covid-19 crisis? Let’s find out. 

What is the meaning of FAANG?

FAANG, originally FANG, is an abbreviation of the names of those five stocks that have an immense effect on the stock market. Earlier, there were four stocks which are Facebook (F), Amazon (A), Netflix (N), and Google (G). Later on, Apple (A) was added to the list in 2017, making it ‘FAANG’ for the investors. 

These five stocks are the giant stock market players, having a significant market share in different indices like S&P 500, and thus they have a substantial impact on the stock market. The change in the price of these shares can affect the other shares in the same industry. 

The overall growth of these five stocks even surpassed the growth of the S&P 500 index in the past decade. It also surpassed the growth of the primarily tech-based index NASDAQ. 

While Facebook, Amazon, Netflix, and Google are primarily internet-based organisations, Apple is the one selling physical products or hardware products. People who invested in these stocks a decade ago have a healthy portfolio now.

Annualized Growth of FAANG * over last ten years as of Jan 2, 2022:

Why is FAANG becoming popular among investors?

The above table, which has the returns from these five stocks, answers why FAANG is becoming popular amongst investors. The returns that these stocks have been generating over the years are incredible.

Moreover, the pandemic and the lockdown also boosted the price of these shares as people were indoors; they were spending more time on Facebook and Google.

Furthermore, the closure of theatres led to an increase in the subscription of Netflix, and people were buying things online, which boosted the performance of Amazon.

How can you invest in FAANG? (Including MF)

According to the RBI, Indian residents can invest $250000 (maximum) each year overseas. This comes under the Liberalised Remittance Scheme (LRS). Now, the investor needs to open a trading account with such brokers who provide trading and investment facilities in international stocks. Then they can buy the stocks of FAANG sitting in India only. 

If you are wondering why you should invest in FAANG stocks, then here are some of the benefits – 

All these five companies have a competitive advantage which makes them potential investments. 

There are intangible assets in all FAANG companies which make them more profitable than their rivals. 

Before buying the FAANG stocks, it is essential to evaluate – 

Your investment portfolio and your investment goals.

Investment budget you have and whether you can purchase these stocks or not. However,  many brokers offer fractional investment to buy even less than one share. 

Compare the FAANG stocks with their competitors. 

FAANG stocks have been gaining traction across the globe and especially in India since last year. The lockdown has turned out to be a boon for the investors of these shares.