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FAANG refers to some of the most popular technology companies and blue-chip stocks in America. The acronym FAANG stands for-
- F- Facebook (FB- now Meta).
- A- Apple(AAPL)
- A- Amazon(AMZN)
The term FAANG was conceived by Jim Cramer in 2013 and he praised the FAANG companies for being totally dominant in their markets. Originally the term was ‘FANG’ with Apple being added later in 2017. Microsoft which is another tech giant does not figure in this acronym. The original four companies are internet companies while Apple is a consumer hardware manufacturer.
In the last decade, FAANG stocks have outperformed the S&P 500 index and each of them trades on Nasdaq. FAANG stocks constitute approximately 17% of the S&P 500 index which is a considerable figure for just 5 stocks and S&P 500 is considered a proxy to the American economy. The volatility of the FAANG stocks can have a considerable influence on the S&P 500 index. The market capitalization of the FAANG stocks is- Apple (2.756 Trillion), Google (1.750 T), Amazon (1.573 T), Facebook (593.8 B), and Netflix (171.66 B).
The FAANG companies are well known throughout the world so we will discuss their business only in brief-
Facebook is a social networking website, that has 2.74 billion monthly active users, and reaches 59% of the world’s social networking population. It is also the owner of Instagram and WhatsApp.
Apple manufactures smartphones, tablets, personal computers, wearable, and accessories. In the last few years, the company has focused on streaming music and video, gaming, and cloud storage.
Amazon is an online retailer that sells books, music, housewares, electronics, toys, movies, and many other goods. The Prime membership of Amazon has 200 million global subscribers and the company is quite profitable in cloud computing services and advertising.
Netflix is a streaming service that is based on subscriptions and people can watch TV shows and movies on devices.
Google is a technology company that has internet-related services like a search engine, online advertising technologies, cloud computing, software, and hardware.
The intangible assets of these companies like goodwill, brand recognition, trademark, patents, and copyrights make them very profitable. Facebook and Google have billions of users. Facebook, Amazon, and Google have a large amount of data that can be used to target advertisements. Netflix has a huge content library and Apple makes both hardware and software for its devices. The use of artificial intelligence by these companies is remarkable.
All these companies dominate the market and have been able to read the future trends well, so the share price has also kept pace. These advantages have made the FAANG stocks attractive for long-term investors.
How can you purchase FAANG stocks from India?
Following are the ways by which FAANG stocks can be bought –
- Indian brokerage–
There are Indian brokerage firms that work in partnership with foreign stock brokerage firms. These companies act as go-betweens and help in executing the orders and a person can open an account with one of these firms.
- Foreign brokerage–
A person can open an account with a foreign brokerage firm operating in India and can invest in the shares of the FAANG companies.
- Indirect investment–
Investors can invest in the US exchange-traded funds (ETFs) that have FAANG shares through domestic brokers or foreign brokers. Another way is to purchase units of the Indian ETF that track the US stock market indices.
The FAANG companies are at the top of the S&P 500 index and continue to display high growth. People all over the world have got used to the services of these companies and it is difficult to imagine a life without these companies. They have a truly global reach and have shown consistent growth in the past. A person can study the risks and invest in these stocks.
If the FAANG stocks are listed in the US markets India too has its HRITIK, SALMAN & BHARATH stocks. HRITIK and SALMAN are the popular Bollywood superstars and the country has BHARATH stocks also. The full form of these stocks stands as-
H – HDFC BANK,
R – RELIANCE,
I – ICICI BANK,
H -HDFC LTD,
I – INFOSYS,
K – KOTAK BANK
S – SBI BANK,
A – AXIS BANK,
L – LARSEN & TOUBRO,
M – MARUTI,
A – AUROBINDO PHARMA,
N – NTPC
The term BHARATH was coined by BNP Paribas and consists of the following stocks-
B- BHARTI AIRTEL
H- HDFC BANK
A- ASIAN PAINTS
R- RELIANCE INDUSTRIES
A- AVENUE SUPERMARTS
T- TATA CONSULTANCY SERVICES
H- HINDUSTAN UNILEVER
The HRITIK, SALMAN, and BHARATH stock are quality large-cap stocks diversified across the sectors. The management of these companies is good with stable cash flows, high probability, and the companies are capable of withstanding any downtrend in the investment cycle.