The shift in consumer behaviour caused by the COVID-19 pandemic is likely to last and will continue to bolster the FAANG stocks (Facebook, Amazon, Apple, Netflix and Google) well into the future, an investment manager has said.
Tribeca Investment Partners lead portfolio manager Jun Bei Liu said the global pandemic and resulting lockdown had accelerated a reliance on digital formats and e-commerce among consumers that was unlikely to be completely reversed post COVID-19.
“When the pandemic first hit and when most nations first went into lockdown, none of us expected FAANG stocks would have come through in such a resilient way. We didn’t know how consumers might behave, we didn’t know how businesses might behave, we didn’t know how quickly the government stimulus might work,” Liu told smstrusteenews.
“In a way, the lockdown has really brought forward a lot of structural shifts in our lives toward digital formats by many, many years. And many of those changes are not going to go away post COVID-19.
“If anything, some of those companies have turned out to be the beneficiaries of the global lockdown.”
She noted, while the resilience of the FAANG stocks during the height of the pandemic and the ensuing market volatility had been unexpected, the shift in consumer behaviour and increased reliance on services such as Netflix and Amazon meant the FAANG stocks would continue to be a reliable option for investors with a long-term view.
As a result, investors potentially concerned by a spike in short-term sell-offs of those stocks in September should not be deterred, Lui added.
“Build your position in those businesses because, over the long term, those businesses will be the ones that will deliver growth for your portfolio,” she said.
In September, an innovation-focused investment manager said the five FAANG stocks had reached the level where they were fully priced, or even overvalued, and investors seeking growth from the technology sector should consider other parts of that market.
Earlier that month, a global manager advised investors to look beyond the FAANG stocks and Microsoft when looking to make a portfolio allocation to the technology sector.