It has not been a good quarter for FAANG stocks. While the S&P 500 dropped 10.4% in 2022, Barron’s reported that Facebook parent Meta Platforms (NASDAQ:FB) has declined 45.3%, Amazon (NASDAQ:AMZN) has fallen 13.4%, Apple (NASDAQ:AAPL) dropped 8.9%, Netflix (NASDAQ:NFLX) plummeted 64.2%, and Google parent Alphabet (NASDAQ:GOOG) fell 17.4%.
Adding to the bad news for these tech giants, MarketWatch reported that the FAANG + Microsoft group lost $1.404 trillion in market value during April, with its combined market capitalization having fallen by $2.214 trillion during 2022. Meanwhile, Investor’s Business Daily notes that an equal-weighted index of four of the five FAANG stocks (not including Apple) is now down 39% this year and 34% over the past 12 months.
“For years, a select group of megacap stocks propped up the market at large with huge outperformance and rising weightings,” writes Bespoke Investment Group analyst George Pearkes. “In 2022, though, those same stocks are now a major index drag.”
Investors looking to gain exposure to growth beyond FAANG stocks may want to consider the American Century STOXX U.S. Quality Growth ETF (NYSEArca: QGRO), which has maintained less than 6% exposure to FAANG-type names. The $219 million ETF tracks the iSTOXX American Century USA Quality Growth Index, which tries to identify U.S. companies that have higher growth potential and stronger financial fundamentals relative to rivals.
QGRO’s stock selection process is broken down into high-growth stocks based on sales, earnings, cash flow, and operating income, along with stable-growth stocks based on growth, profitability, and valuation metrics. The fund aims to have 35% to 65% of its portfolio in high-growth stocks, and 30% to 65% in so-called stable growth companies that exhibit attractive profitability and valuation.
QGRO has an expense ratio of 0.29%.
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