The Magnificent Seven stocks of Apple, Amazon, Nvidia, Meta Platforms, Microsoft, Tesla, and Alphabet have been a powerful collective force in the US share market in recent years.
Any Aussie investor who owns a simple ASX exchange-traded fund (ETF) tracking the S&P 500 Index (SP: .INX) or Nasdaq Composite Index (NASDAQ: .IXIC) has big exposure to them.
Take the iShares Core S&P 500 AUD ETF (ASX: IVV) for example.
Although this ASX ETF tracks the performance of 500 companies, the Magnificent Seven comprises 32.5% of the S&P 500 Index's total market capitalisation.
So, if you invest in the ASX IVV, 32.5% of your money is invested in these seven stocks.
But what if you want more?
What if you are so confident in the Mag 7's future that you want even more of your money invested in them?
You have two choices.
Firstly, you can buy stock in each of the seven companies directly.
Secondly, you can buy the Global X Fang+ ETF (ASX: FANG), which will give you almost twice the Magnificent Seven concentration of the IVV ETF, with a caveat.
What is the Fang+ ETF?
The Fang+ ETF has 58% exposure to the Magnificent Seven, however, the caveat is it does not currently hold Tesla.
(You can read about why several ETFs are excluding Tesla for investment these days here.)
This ASX ETF seeks to track the performance of the NYSE FANG+ Index.
ICE Data Indices launched the NYSE FANG+ Index in 2017.
The purpose was to provide "exposure to a select group of highly-traded growth stocks of tech-enabled companies".
At the time of the launch, the NYSE FANG+ Index incorporated 10 US stocks.
They included the 'FANG' stocks, which were the hot equities of the time.
They were Facebook, Apple, Amazon, Netflix, and Google (parent company Alphabet).
The other five stocks were Nvidia, Tesla, Alibaba, Baidu, and the formerly listed Twitter (now called X).
Over time, the five FANG stocks eventually evolved into the Magnificent Seven.
Netflix didn't make it into this illustrious group, but Apple, Amazon, Google, and Facebook, which had been re-named Meta Platforms by then, did.
They were joined by Microsoft, Tesla, and Nvidia.
Today, the NYSE FANG+ Index comprises the Magnificent Seven minus Tesla, along with Netflix and three others.
The three others are cybersecurity business Crowdstrike, semiconductor and infrastructure software company, Broadcom, and enterprise IT services management firm, ServiceNow Inc.
Global X launched its ASX Fang+ ETF in 2020.
Since then, the ASX ETF's total returns have averaged 34.1% per annum compared to 17.8% for the S&P 500 over the same period.
This ETF's weightings are 12% Crowdstrike, 11% Meta, 11% Netflix, 10% Nvidia, 10% Amazon, 10% Broadcom, and 9% each for ServiceNow, Microsoft, Apple, and Alphabet Class C shares.
No. 1 international shares ASX ETF of 2024
The Fang+ ETF was the top international shares ASX ETF for total returns last year.
The total return was a staggering 65%.
The ASX FANG ETF has a management expense ratio (MER) of 0.35%.
Be mindful that investing in only a small number of stocks presents concentration risk.
This can work for you or against you.
It's important to think about your risk tolerance before choosing your investments.
You can read about the benefits of diversification, which is the opposite of concentrated investing, here.
