ICE launches high-growth tech FANG+ Index

Sep 26th, 2017 | By | Category: ETF and Index News

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Intercontinental Exchange (ICE), the owner of the New York Stock Exchange, has launched an index that tracks high-growth technology stocks. Called the FANG+ Index, after the acronym used for Facebook, Apple, Amazon, Netflix and Google, the index provides exposure to ten highly liquid tech-enabled companies including the aforementioned five.

ICE launches high-growth tech FANG+ Index

The FANG tech stocks now make up over 10% of the S&P 500.

The rest of the index is made up of Alibaba, Baidu, Nvida, Tesla and Twiter, and all constituents are equally weighted.

ICE is planning to launch a quarterly future contract based on the index, subject to regulatory review.

Due to diversification requirements, it is unlikely that the index in its current shape will be licensed to an ETF provider, but if the index expands and new names are added it will certainly appear on the radar of ETF product developers.

Trabue Bland, president of ICE Futures US, commented: “Given their size, performance and innovation, the FANG stocks are among the most widely traded stocks and we’re pleased to offer a capital efficient means of accessing and hedging these growth stocks in a cost-efficient way. We are leveraging our product development, index solutions and global feeds to develop, distribute and trade this new index future.

The FANG stocks have made headlines in recent years for their standout share price performance. The FANG stocks have grown to make up more than 10% of the S&P 500, while the information technology sector now makes up 23% of the index.

Based on back-tested performance data, the combination of stocks in the NYSE FANG+ Index have returned a 28.4% annualized total return from September 19, 2014 to September 15, 2017, as compared to 14.9% for the NASDAQ-100, 9.9% for the S&P 500 and 16.8% for the S&P 500 Information Technology Index.

According to ICE, the index will be rebalanced quarterly to “ensure that the selection and weightings of the constituents continue to reflect as closely as possible the index’s objective of representing a segment of the technology and consumer discretionary sectors consisting of the most highly-traded and high-growth technology and internet/media stocks”.

The index methodology states that ICE reserves the right to choose which and how many stocks make up the index at the quarterly rebalance.

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