A new ETF will give investors a way to invest in one of the most popular high-growth acronyms ever created. Here’s a look at the new Roundhill FAAMG ETF BIGT.
What Happened: Known for thematic investment ETFs, Roundhill Investments is launching a series of BIG ETFs that hold the largest companies in specific sectors. This includes the recent launch of the Roundhill Big Bank ETF BIGB.
On Tuesday, Roundhill launched the Roundhill Big Tech ETF, which is the first-ever FAAMG ETF, offering exposure to the famous FAANG stocks and the acronym's latest evolution.
“With all of the market uncertainty in 2023, investors are seeking safety in FAAMG stocks, which are viewed as amongst the highest quality companies globally,” Roundhill Chief Strategy Officer Dave Mazza said.
Included in the new ETF are the following stocks that together represent the acronym FAAMG.
Meta Platforms (Facebook) META
Apple Inc AAPL
Amazon.com Inc AMZN
Microsoft Corporation MSFT
Alphabet Inc (Google) GOOGGOOGL
Together, the stocks represent five of the 10 largest publicly traded companies.
Television host and financial commentator Jim Cramer is credited with some of the first public uses of the acronyms FANG and FAANG to represent a basket of select high-growth technology stocks. At the time of the creation, Meta Platforms traded as Facebook and Alphabet traded as Google. The original acronym also included Netflix Inc NFLX, which has since fallen out of favor as part of the basket.
Cramer was prompted to change the acronym to MAMAA in late 2022 to represent the new names and to replace Netflix with Microsoft.
“Jim Cramer initially coined the term ‘FANG’ in 2013 to highlight four companies that he believed to be dominant players in their respective fields of technology,” Roundhill CEO Will Hershey told Benzinga. “In the years since, the term has evolved as it has become clear that there are five technology companies that stand above all else in terms of their revenues, pofits, breadth of product offerings, and more broadly, impact on the world as we know it – Facebook, Apple, Amazon, Microsoft and Google.”
Hershey told Benzinga that new ETF regulations allow Roundhill to offer funds with as few as five companies that offer the same tax and cost efficiencies as other ETFs.
“We believe that the FAAMG companies remain as relevant a group as ever and believe that there is significant market demand for a vehicle like BIGT.”
Related Link: New Metaverse ETF Launches From Roundhill Investments, What Investors Should Know
Why It’s Important: The new ETF holds only five stocks, giving investors a way to capitalize on the high-growth names without going outside the technology sector or to smaller technology names.
“Until today, the only way to gain exposure to these tech giants was by purchasing all five stocks individually, or via diversified tech ETFs that include smaller and potentially less relevant stocks,” Mazza said.
The ETF offers a “targeted approach” and comes with an expense ratio of 0.29%. The fund will hold equal weighting of the five stocks and rebalance quarterly.
“Investors recognize that the FAAMG companies, are not only leaders in their respective technologies, such a social media, e-commerce, consumer electronics, cloud computing, and search, but also the largest in terms of revenue, profits, and market capitalization.”
Roundhill also plans to launch dedicated ETFs for the defense and airline sectors that will hold a limited number of companies that represent the largest companies in the respective sectors.
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