FAANG is a term used to describe the stocks of a group of successful US-based companies. FAANG stocks are said to be some of the highest-performing international stocks. This is an acronym for a group comprised of the five most successful American tech gainst with high-growth stocks. These stocks are popular not only within the United States but also internationally. 

FAANG stocks

FAANG stands for Facebook, Amazon, Apple, Netflix, and Google. Coined by Jim Carter, a CNBC personality in 2013, FAANG stocks represent some of the most successful stocks in the share market with optimistic growth. Originally, the acronym was FANG, but later, Apple also joined this group, making it FAANG in 2017.

Since these are shares of the most successful American tech giants, these companies have a market capitalisation of over USD 7 trillion (As of the first quarter of 2022). 

FAANG stocks chart

Here is a list of the FAANG stocks with an estimation of their annualised returns and other factors:

*Disclaimer: All data are subject to change based on market transitions

FAANG stocks example

FAANG is composed of the stocks of the biggest tech companies in the international market. Thus, their direct stocks are examples of FAANG. Any share of the companies, including Apple, Facebook (Meta), Amazon, Netflix, or Google (Alphabet), is a FAANG stock. 

Generally, mutual funds are incapable of directly investing in FAANG stocks. However, you can directly purchase these stocks or choose ETFs to invest in these stocks.  

How to invest in FAANG stocks?

FAANG stocks are international stocks, and it is possible to invest in them from India as well. There are two ways you can invest in FAANG, which are direct purchase and indexing. Here are the steps to follow:

Step 1: Choose a FAANG stock to invest in, depending on your preferences.

Step 2: Invest directly in the stocks without involving mutual funds. You can do so by opening an overseas trading account.

There are several Indian stockbrokers partnered with brokerage firms in the USA that allow you to invest directly. In addition, some foreign stockbrokers in India allow you to open a trading account with them.

Step 3: Complete the KYC verification process to open an account. Then, link your bank account to purchase FAANG stocks.

Step 4: Various exchange-traded funds (ETFs) also let you invest in these stocks.

Step 5: Decide on an amount below USD2,50,000 to invest. This is the limit on foreign stock investments set by the Liberalised Remittance Scheme (LRS) of the Reserve Bank of India.

Future of FAANG stocks

The next FAANG stocks will mostly include the next tech giants who are likely to capture the international stock market. FAANG stocks changed into MAAMA, which included the biggest tech companies in the United States. MAAMA stands for Meta (the new brand of Facebook), Apple, Amazon, Microsoft (which surpassed Netflix in terms of market cap), and Alphabet (the new brand of Google). 

This rebranding of FAANG has kept the notion of the US tech giants being the most dominant group in the international stock market intact. Thus, even if the acronym changes with time, it will likely retain its power and dominance.

FAANG stocks market cap

Market capitalisation or market cap is the total worth of the company stocks. FAANG’s market cap is the cumulative worth of its shares.

Here is the formula to calculate market capitalisation:

Market cap = Current share price x the total number of shares outstanding

The combined worth of FAANG stocks is currently more than USD 7 trillion, covering more than 10% of the U.S. stock market. It holds a large percentage of the total American stock market capitalisation.

Final words

FAANG stocks or MAAMA stocks are still dominating the international stock market with their growing market cap. These stocks have been consistently hegemonising the international stock market for a long period. With above 10% of the entire stock market of the United States, these are considered to have excellent returns based on external factors such as the PE ratio. Any Indian citizen can invest directly, adhering to the RBI guidelines.

FAQs

Which is the best FAANG stock?

Deciding the best FAANG stock will depend on various factors. If you consider market cap and annualised 5-year return, you’ll see that Apple ranks at the top. However, Amazon is ahead on P/E return. Thus, you can choose depending on your preferred parameter.

What stocks are in the FAANG index?

The FAANG index consists of five powerful tech companies in America that are Facebook (now called Meta), Apple, Amazon, Netflix, and Google (now called Alphabet Inc.).

Is it good to invest in FAANG stocks?

All FAANG stocks have generated huge returns for investors previously because of their growing market cap. They are still growing, making them some of the most desirable shares in the market. However, their share prices are also very high.

How to buy FAANG stocks in India?

You can directly invest by yourself, or you can choose an ETF. However, keep in mind that the RBI LSR scheme sets a limit of USD2,50,000 for foreign stock investments for Indian citizens.