Investors seeking out the FAANG (Facebook, Amazon, Apple, Netflix and Google) stocks based on their recent performance highs might be better off investing in the technology sector more broadly, an investment expert has said.
According to BetaShares chief economist David Bassanese the FAANG stocks are likely to continue performing well, however, given the success of the technology sector as a whole, less well-known technology stocks are also worthy of investors’ consideration and should not be overlooked.
“Technology more broadly, like the NASDAQ 100, and even technology outside of that, such as Asian technology companies involved in cybersecurity and robotics and so on, are doing very well,” Bassanese told smstrusteenews.
“I think growth and technology, these are the themes that were outperforming before COVID-19 and they just so happened to become defensive stocks during the COVID-19 shutdown.
“As we emerge from COVID-19, they will basically reassert themselves as growth stocks and in this low interest rate world, I think they’re going to continue to do well.
“They are likely to be sources of outperformance in global markets – you don’t need to pick individual names.”
Given the fast-changing nature of the sector, investors interested in technology were more likely to benefit from a tech-specific exchange-traded fund (ETF) than focusing on individual companies, Bassanese added.
“Technology is such a dynamic sector. It’s one thing to identify a sector; it’s another thing to then identify individual companies that are going to do well,” he noted.
“You can get a lot of different global technology exposure, highly diversified, quite easily through ETFs.
“Buying a broadly diversified fund in these areas means you can get that without necessarily having to back an individual company’s performance because it’s a very fast-changing, dynamic part of the market.”
Last month, Tribeca Investment Partners lead portfolio manager Jun Bei Liu said the shift in consumer behaviour caused by the COVID-19 pandemic was likely to last and would continue to bolster the FAANG stocks well into the future.''