When I first heard about FAANG, seven years ago, I wanted to know how to buy Google shares in India! Investing in FAANG shares from India essentially means placing your money in one of 5 enormously popular American tech companies.

Given that I have now mentioned this acronym thrice, you might be wondering, “What is a FAANG stock?” or "What are FAANG companies?" Continue reading this blog to discover more. 

What is FAANG?

The acronym FAANG refers to five of America’s most prominent technology companies i.e., Meta(FB), Amazon, Apple, Netflix and Alphabet (of Google fame). In fact, they have a combined market capitalisation of nearly USD 7 trillion as of 2022’s first quarter.

Decoding the FAANG Popularity in India

• While the big five technology companies mentioned under the FAANG acronym enjoy tons of popularity in the United States of America, it isn’t to say that they haven’t got interested investors elsewhere. 
• FAANG shares in India, for instance, can now be invested in via multiple routes. Simply think of mutual funds, exchange-traded funds, or directly investing in stock options via a domestic brokerage that has tied up with an American brokerage. 
• By investing in FAANG stocks, Indians like you and I stand to benefit as the returns these stocks offer have been known to outperform the broader American stock market as well as the Indian stock markets. All five FAANG companies have also dominated the industry within which they operate. FAANG stocks have showcased expansive growth over the years which is yet another positive. To add to their appeal, if you are looking to diversify your portfolio and are open to investing in foreign securities, FAANG stocks are the way to go.
• Further, since FAANGs trade on the U.S. stock markets, any profits they stand to generate are made in U.S. Dollars. As the value of the U.S. Dollar surpasses that of the Indian rupee, even the most minute gains in the company are likely to impact the overall value of your holdings positively.
• Finally, FAANG stocks account for a major chunk of the total market capitalisation of the stock market. Any movements in their prices can impact the overall market.

Fast Facts to Consider Before Jumping on the FAANG Bandwagon

Before you decide to invest in FAANG stocks from India, it is crucial to take into account the following considerations.

• Make sure that your individual investment portfolio is reflective of your own financial and investment goals. You should only invest in FAANG stocks, provided they align with your goals.
• Next, you should consider the budget you have allocated to your investments and the prevailing prices of each FAANG stock. Each of these may be too expensive for you to afford on your own, in which case it may make more sense to invest in them via fractional investing.
• Finally, you should make it a point to draw comparisons between FAANG stocks and their competitors. 

Challenges Associated with the FAANG Train

Some of the challenges associated with investing in FAANG stocks are as follows.

• Almost all five technology companies have come under fire by government and regulatory bodies over the content they have made available and their methods of distributing information. This, in turn, impacts their performance in the stock market. Investors need to consider this factor before investing in these stocks.
• FAANG companies are often accused of monopolising the market they operate within. If you invest in a FAANG stock and one of its products is removed from the market, it can affect the stock’s overall performance. 

How to Invest in FAANG?

There are two ways in which you can invest in FAANG stocks as well as other US stocks from India. These options are listed below.

• Direct investments made via an overseas trading account
• Indirect investments made via mutual funds or Exchange Traded Funds (ETFs)

If you are just getting started with international investments, it may be a better idea to invest in the US markets via mutual funds or ETFs.

Whichever course of action you choose, remember to keep track of the US stock market live feed online so you have a better idea of how the market is behaving. Learn more about US Stocks via this short video: https://www.youtube.com/shorts/VywxVwa-9nM

Final Thoughts

Should you decide to take the plunge and invest in FAANG stocks from India, you may stand to bring home the bread. Why only use their products when you can also be a partial owner? Ultimately, though, technology is evolving at a rapid pace, and competitors could overtake the current market capitalisation that FAANG stocks enjoy. Further, the challenges outlined above can impact your holdings — so you must do adequate research. 

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Frequently Asked Questions

1. What is FAANG now called?

As of late 2021, the financial world was abuzz with a new acronym for FAANG. FAANG is now popularly known as MAMAA according to the finance world. MAMAA refers to Meta, Apple, Microsoft, Amazon and Alphabet (Google’s parent company). This occurred after Facebook got rechristened as Meta & Netflix's market performance dipped significantly in mid-2021.

2. Is it good to invest in FAANG stocks? 

FAANG stocks have consistently outperformed their competition in the US and Indian markets. They account for a significant portion of the S&P 500. Investing in FAANG stocks from India offers the potential for gains in USD. However, thorough research and risk assessment are crucial as the tech industry evolves rapidly with new players emerging.

3. What is the significance of FAANG companies in the tech industry?

The FAANG companies (Facebook, Apple, Amazon, Netflix, and Google) have disrupted traditional industries, transformed how we communicate and consume media, and driven innovation in artificial intelligence and cloud computing. With a combined market capitalization of over $5 trillion, they are among the world's largest and most successful companies.

4. How have FAANG stocks performed in the stock market historically?

FAANG stocks have historically performed very well in the stock market, with significant increases in value over the past several years. However, there is ongoing debate among investors and analysts about whether the stocks are currently overvalued and due for a correction. Factors such as regulatory scrutiny, economic uncertainty, and increasing competition may impact the future performance of FAANG stocks.