Actively managed FANG ETF goes for outperformance
Nearly a year of extremely volatile and exciting times has given Sabretooth Advisors’ FNG ETF a rollercoaster of a performance ride.
Portfolio Manager and Market Technician Dave Chojnacki explains that the AdvisorShares New Tech and Media ETF was launched in July 2017 as an actively managed strategy designed to invest in the companies that are driving economic growth in the modern era.
The principal focus of the USD45 million is on so-called FANG companies. Chojnacki explains that their FANG portfolio is very concentrated and at the moment has no first initial with Facebook dropped and replaced with Square, making it something more of a SANG.
The FANG part of the ETF is currently invested 25 per cent in Amazon, Alibaba, Netflix and Google, and that concentration can go up to 35 per cent.
“We are trying to find the new FANG companies,” Chojnacki says. “So we look at new things such as robotics, AI and cyber security – particularly blockchain.”
Performance saw their launch price of USD20 a share go up to USD24 at the end of January but the tech sell-off in February and March had its effect and the fund’s price now stands at USD21.18.
“Everything is technology these days,” Chojnacki says. “The internet of things means that it is in all appliances and cars so we have some positions in semi-conductors and the chip sector and Nvidia because they are in AI and robotics.”
Security firms such as FireEye, Proofpoint and Zebra are all in the portfolio.
“These are companies that are going to be going into the blockchain technology and that technology is so secure right now it looks like the way to go in terms of handling financial transactions or even in healthcare,”.
Chojnacki also mentions Qualys, a firm which is involved in security in health care and in keeping healthcare information secure.
Chojnacki believes that the actively managed nature of the ETF’s portfolio marks it out as different from other technology ETFs.
“We were originally looking for companies with USD500 million in market cap and 10 per cent growth every year,” he says. “But for the disruptors who were the original FANGs, we can go underneath that market cap if we can find a small company in security or communications.”
Chojnacki’s background is 30 years in the IT industry and he is also a market technician.
“We use lots of technicals in terms of moving in and out of stocks and based on technicals we could jump right back in tomorrow if saw the opportunity,” he says.