The famous FAANG quintet were among the most stellar performers of the recently deceased bull market. They’ve also been among the worst performers in the newly minted bear market, but some analysts believe these growth names and others could lead a rebound later this year, a scenario that could benefit ETFs, such as the Global X Social Media ETF (NasdaqGM: SOCL).
SOCL seeks to provide investment results that correspond generally to the price and yield performance of the Solactive Social Media Total Return Index. The index tracks the equity performance of the largest and most liquid companies involved in the social media industry, including companies that provide social networking, file sharing, and other web-based media applications.
“For the most part the secular growth theme has held up well since the S&P 500 index US: SPX peaked on Feb. 19, unlike the second half of 2018, when recession fears caused equity investors to briefly abandon this theme,” wrote Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, in a Wednesday research note, reports Chris Matthews for MarketWatch.
The $95.6 million SOCL allocates about 14.40% of its combined weight to Facebook (NASDAQ: FB) and Google parent Alphabet (NASDAQ: GOOG) – two of the five FAANG names.
Sizing up SOCL
Facebook and China’s Tencent are among the most important drivers of SOCL’s returns. For what it’s worth, data suggest hedge funds remain fond of FAANG names and some other previous internet high fliers.
“These trends are also manifest in hedge fund positioning, with the list of most-owned stocks by hedge funds dominated by FAANG stocks and other “secular growers” in the technology and communication services sector,” according to MarketWatch.
The universe of thematic ETF is booming – by both assets and population – and with that growth comes the need to identify what exactly constitutes a thematic investment concept and how advisors and investors can simplify the process of accessing this landscape.
“We have defined the universe of thematic funds as those that select holdings based on their exposure to one or more investment themes. These themes may pertain to macroeconomic or structural trends that transcend the traditional business cycle. Examples include demographic shifts or technological advances,” said Ben Johnson of Morningstar in a recent note.
Other top 10 holdings in SOCL include Twitter (NYSE: TWTR) and Snap (NYSE: SNAP).
For more on thematic ETFs, please visit our Thematic Investing Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.