When I first heard about FAANG, seven years ago, I wanted to know how to buy Google shares in India! I have been reading up about FAANG stocks since then. By now, I am familiar with what they are & recently invested in them. Investing in FAANG shares from India essentially means placing your money in one of 5 enormously popular American tech companies.
This popularity is evident from the fact that a number of us currently enjoy their product offerings and services in our daily lives. After all, you might have been scrolling through Instagram before (or even while) reading this article! Instagram is a product offered by Meta (formerly Facebook) — which falls under FAANG.
Given that I have now mentioned this acronym thrice, you might be wondering, “What is FAANG stock?” Continue reading to understand more.
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). Apart from each of these companies being widely recognised, they account for some of the largest global companies. In fact, they have a combined market capitalisation of nearly USD 7 trillion as of 2022’s first quarter.
The anticipated growth, strength, and momentum that each of the FAANG stocks carries has led to several large and influential investors funnelling their money towards them. Berkshire Hathaway and Renaissance Technologies are just some of the big names relevant here. Therefore, it should come as no surprise that several ordinary people are eager to invest in Facebook, buy Amazon shares, invest in Apple, purchase Netflix shares and buy Google stock.
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.
This desire to invest in Apple shares in India or buy Netflix shares in India stems from the success each of these companies has enjoyed. To understand this better, consider the S&P 500 which is a broad representation of the American market. As of August 2021, FAANG stocks accounted for approximately 19 percent of the S&P 500. This is a large figure given that the S&P 500 is ordinarily viewed as a proxy to indicate the status of the broader US economy.
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.
A lot of Indians feel that all five companies are well established and view them as safe investments. In fact, 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.
Before you decide to invest in FAANG stocks from India, it is crucial to take into account the following considerations.
Some of the challenges associated with investing in FAANG stocks are as follows.
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.
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.
Historically, FAANG stocks have consistently outperformed their competition in the US & Indian markets by a relatively large margin. To understand this better, consider the S&P 500 — a broad representation of the American market. As of August 2021, FAANG stocks accounted for approximately 19 percent of the S&P 500. So, it is good to get in on the action. Especially since investing in FAANG stocks from India would mean that any gains earned would be in USD. However, the best foot forward should start with research. Risk assessment is another major factor as the tech world develops at a breakneck pace & new players are always around the corner.
