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FAANG+: Both Market-Leading and Volatility-Averse

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

As the market took on a distinctively bullish outlook shortly after the end of the second quarter, FAANG+ displayed increasingly strong evidence of directional cues being taken from the market albeit with a distinct outperformance.

2022 saw the market close 20% lower than at the start of the year. In the same period, FAANG+ read the same phenomenon to close more than 50% lower than at the start of the year.

As the market took on a distinctively bullish outlook shortly after the end of the second quarter, FAANG+ displayed increasingly strong evidence of directional cues being taken from the market albeit with a distinct outperformance.

2022 saw the market close 20% lower than at the start of the year. In the same period, FAANG+ read the same phenomenon to close more than 50% lower than at the start of the year.

In 2023, in the year till the 19th of May, the performance comparison is even more/b> skewed. While the market is up by 9% from the start of the year, the FAANG+ is up by more than 52%.

Now, the entirety of FAANG+ is represented in the S&P 500 as well. This highlights an important fact: these 10 stocks now represent the “top of the line” of the market and occupy a large portion of the market only limited by weightage limits in the index:

  1. If any company has a full market capitalization (FMC) weight greater than 24%, the company’s weight is capped at 23%;

  2. The sum of the companies with weights greater than 4.8% cannot exceed 50% of the total index weight, failing which weights are readjusted starting from the smallest company until this rule holds true.

If unfettered of these rules, the S&P 500’s net performance would be dominated by the likes of these ten companies.

Quarterly Price and Volatility Trends

A tabulation of volatility (as represented by standard deviation) for each quarter and price changes from the start to the end of the quarter from the start of 2021 till the present reveal some very interesting trends:

Overall trends in volatility indicate that the market tends to be around 7-9 times more volatile than the FAANG+. The lowest point is the 6 times level seen this past quarter while the highest is at the 10-20 times level seen from Q2 through Q4 of this past calendar year. In terms of price changes, the rate of price change for the FAANG+ theme has tended to be less extreme and (generally) more bullish than that in the market.

An Opportunity Over the Market?

With further contractions expected in the market as calls for a recession becomes increasingly more strident, it should be evident that trends impute a higher level of survivability for these highly-recognizable technology-driven companies over other companies, be they large-, mid- or small-cap. This can also be the attribution for the continuing price ratio overvaluation of these companies.

As the market twists and turns over the next few prospectively-tumultuous quarters, it can be expected that FAANG+ will continue to receive disproportionate attention. To capitalise on this opportunity, Leverage Shares has launched the FAANG+ ETP that holds these ten stocks in equal weights. With wide access across the Continent and affordable pricing, tactical trading strategies based around the FAANG+ will provide an extra edge for sophisticated investors.

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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Violeta Todorova

Senior Research

Violeta se unió a Leverage Shares en septiembre de 2022. Ella gestiona la realización de análisis técnicos, investigación macroeconómica y de acciones, y ofrece información valiosa que ayuda a la definición de estrategias de inversión para los clientes.

Antes de unirse a LS, Violeta trabajó en varias empresas de inversión de alto perfil en Australia, como Tollhurst y Morgans Financial, donde pasó los últimos 12 años de su carrera.

Violeta es una técnica de mercado certificada de la Asociación Australiana de Analistas Técnicos y tiene un Diploma de Postgrado en Finanzas e Inversiones Aplicadas de Kaplan Professional (FINSIA), Australia, donde fue profesora durante varios años.

Julian Manoilov

Marketing Lead
Julián se unió a Leverage Shares en 2018 como parte de la principal expansión de la compañía en Europa del Este. Él es responsable de diseñar estrategias de marketing y promover el conocimiento de la marca.

Oktay Kavrak

Head of Communications and Strategy

Oktay se incorporó en Laverage Shares a fines de 2019. Él es responsable de impulsar el crecimiento del negocio al mantener relaciones clave y desarrollar la actividad de ventas en los mercados de habla inglesa.

Él vino de UniCredit, donde fue gerente de relaciones corporativas para empresas multinacionales. Su experiencia previa es en finanzas corporativas y administración de fondos en empresas como IBM Bulgaria y DeGiro / FundShare.

Oktay tiene una licenciatura en Finanzas y Contabilidad y un certificado de posgrado en formación empresarial de Babson College. También es titular de una certificado CFA (Chartered Financial Analyst).

Sandeep Rao

Investigación

Sandeep se unió a Leverage Shares en septiembre de 2020. Está a cargo de la investigación de líneas de productos existentes y nuevas, clases de activos y estrategias, con un enfoque particular en el análisis de eventos y desarrollos recientes.

Sandeep tiene una larga experiencia en los mercados financieros. Comenzó en un hedge fund con sede en Chicago como ingeniero financiero, su carrera abarcó varios dominios y organizaciones durante un período de 8 años, desde la División de Prime Services de Barclays Capital hasta (más recientemente) el Equipo Index Research de Nasdaq.

Sandeep tiene una maestría en Finanzas, así como un MBA del Illinois Institute of Technology de Chicago.

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