Rex Shares and Bank of Montreal recently extended its suit of FANG+ Exchange Traded Notes (ETN). The latest launches are MicroSectors FANG+ Index 2X Leveraged ETNs FNGO, MicroSectors FANG+ Index -2X Inverse Leveraged ETNs FNGZ and MicroSectors FANG+ Index Inverse ETNs GNAF.
Investors should note that the FANG+ segmentoffers exposure to a select group of widely-held technology stocks. This includes the five core “FANG” stocks — Facebook, Apple, Amazon, Netflix and Alphabet’s Google, and five more actively-traded technology growth stocks — Alibaba, Baidu, NVIDIA, Tesla and Twitter.
Why Widen the FANG+ Lineup?
Before these, Rex Shares rolled out triple leveraged ETNs in January 2018. Those products were BMO REX MicroSectors FANG+ Index 3X Leveraged ETNs (FNGU - Free Report) and BMO REX MicroSectors FANG+ Index -3X Inverse Leveraged ETNs (FNGD - Free Report) . Both products charge 95 bps in fees.
Within a little more than six months, FNGU hauled in $73.8 million in assets, while FNGD added about $28.3 million in assets. This success perhaps led REX to broaden its FANG+ lineup with a different magnitude of ETNs. Plus, both long and short FANG+ products suit every kind of market environment.
FANGs are hot. Though this season came in mixed for the space with Google parent Alphabet (GOOGL - Free Report) , Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) reporting blockbuster earnings and Netflix (NFLX - Free Report) , Facebook (FB - Free Report) as well as Twitter (TWTR - Free Report) falling flat, investors’ desire for FANG+ in their portfolios have hardly waned (read: Twitter Thrashed on Falling MAU: ETFs in Focus).
Google and Facebook belong to a top-ranked Zacks industry (top 42%), Netflix comes the top 38%, Twitter is from the top 45% and Apple hails from the top 25%. So, if investors are bullish on these industries, they can easily bet on FNGO. After all, the last four years have been great for FAANGs with total market capitalization reaching $3.4 trillion from $1.2 trillion, taking these stocks to great heights and calling for FNGO.
On the other hand, overvaluation concerns are rife in FANG+. Bank of America Merrill Lynch analysts, raised warnings ahead of FANG investing and asked investors to sell the sector “on signs inflows have reached bubble territory.” In fact, Facebook saw “the biggest one-day wipeout in value terms in U.S. stock market history” last month after reporting earnings (read: Facebook Slump Drags Down Tech ETFs: Any Winners?).
Some analysts are warning that even if FAANGs are growing fast, growth rates should invariably slow down once they mature. In such situations, those inverse ETFs, both regular and leveraged funds, will be fruitful for investors.
Will These See Success?
After witnessing Rex Shares’ success for the triple-leveraged products, we can expect lesser-risky, double-leveraged products to haul in investors’ assets meaningfully. There is another ETF called AdvisorShares New Tech and Media ETF in the market that was builton the same theme.
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