Although they have recovered some recently, FANG, the acronym for tech giants Facebook, Amazon, Netflix, and Google (Alphabet), has lost some of its market performance preeminence, according to experts. Collectively the group is down nearly half a trillion dollars in market value since each stock’s 52-week high. Google has been the biggest decliner, decaying $173 billion since April.
While most investors are aware of the variety of ETFs that allow entrance into FANG ownership, bearish views are FANG are more challenging to execute using ETFs. For investors wishing they could make a downside bet on the group of technology stocks without selling them all individually, there is an ETF for that: the MicroSectors FANG+ Index -3X Inverse Leveraged ETN (FNGD).
FNGD investment seeks return linked to a three times inverse leveraged participation in the daily performance of the NYSE Fang+™ Index, total return (the “index“). The notes are intended to be daily trading tools for sophisticated investors to manage daily trading risks as part of an overall diversified portfolio. The index is an equal-dollar weighted index designed to represent a segment of the technology and consumer discretionary sectors consisting of highly-traded growth stocks of technology and tech-enabled companies.
FNGD offers leveraged notes that are inversely tied to FANG performance, meaning that when the FANG stocks sell off, the ETF makes amplified gains. The caveat, of course, is that when the stocks are performing well, losses can be much more significant as well.
As a geared product, FNGD is designed to be a short-term trading tool and not a long-term investment vehicle, making it ideal for investors looking to trade the fluctuations in the tech marketplace. It’s also worth keeping in mind that the note tracks three times the inverse of the daily price movements of the index, so long-term returns could materially differ from those of the underlying index. Although FNGD’s almost 1% expense fee may seem exhorbitant, holding costs shouldn’t be a priority for short-term positions.
For more leveraged plays, visit our Leveraged & Inverse ETF Channel.