Gain exposure to growth beyond FAANG stocks with QGRO

Ihe quarter was not good for FAANG shares. While the S&P500 fell by 10.4% in 2022, Barron’s reported that Facebook’s parent Meta Platforms (NASDAQ:FB) fell 45.3%, Amazon (NASDAQ:AMZN) fell 13.4%, Apple (NASDAQ:AAPL) fell 8.9%, netflix (NASDAQ:NFLX) fell 64.2% and Google’s parent Alphabet (NASDAQ:GOOG) fell 17.4%.

Adding to bad news for these tech giants, MarketWatch reported that FAANG + Microsoft Group lost $1.404 trillion in market value in April, with its combined market capitalization dropping $2.214 trillion in 2022. Meanwhile, Investor’s Business Daily notes that an equal-weighted index of four of five FAANG stocks (excluding Apple) is now down 39% this year and 34% over the past 12 months.

“For years, a select group of megacap stocks have supported the broader market with huge outperformance and increasing weightings,” writes Bespoke Investment Group analyst George Pearkes. “In 2022, however, those same stocks are now a major drag on the index.”

Investors looking to gain exposure to growth beyond FAANG stocks may want to consider the American Century STOXX US Quality Growth ETF (NYSEArca: QGRO), which maintained less than 6% exposure to FAANG-like names. The $219 million ETF tracks the iSTOXX American Century USA Quality Growth Index, which attempts to identify US companies that have higher growth potential and stronger financial fundamentals relative to their competitors.

QGRO’s stock selection process is divided into high-growth stocks based on sales, earnings, cash flow and operating income, and stable-growth stocks based on measures of growth, profitability and valuation. The fund aims to have 35% to 65% of its portfolio in high growth stocks and 30% to 65% in so-called stable growth companies that offer attractive profitability and valuation.

QGRO has an expense ratio of 0.29%.

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