What is the "iFreeNEXT FANG+ Index" that is also the focus of NISA? Latest component stocks and future outlook?

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Introduction.

One of the mutual funds attracting attention under the reserve NISA isDaiwa-iFreeNEXT FANG+ IndexThere are

It is a particularly attractive option for investors interested in investing in U.S. technology companies, including GAFAM. GAFAM ranks high in popularity among mutual funds and has attracted the attention of numerous investors.

While I do not personally invest directly in each of the individual FANG stocks, the FANG+ Index is attractive to me as I seek ways to invest in U.S. big tech companies.

While the index boasts excellent performance, the risks associated with it cannot be ignored.

We will take a deep dive into the characteristics and performance of this stock in the high-risk/high-return category, comparing it to other popular stocks such as the S&P 500 and the NASDAQ 100.

For those who are considering selecting stocks for their reserve NISA, we hope that the potential value and risks of the FANG+ Index, as well as a comparison with other major indexes, will help you make an informed investment decision.

What is FANG?

FANG is an acronym for four major American technology companies.
Specifically, the following four companies are referred to.

• Facebook (now called Meta Platforms)
• Amazon
• Netflix
• Google (parent company is Alphabet)

FANG has developed innovative business models in the technology industry,It represents a group of companies that have driven the growth of the digital economy in recent years.

These companies have had an overwhelming presence in the stock market and have been particularly influential in the overall market trends. Because of their influence, interest in FANG stocks continues to grow among investors.

What is the FANG+ Index?

• FANG+ is an equity index composed mainly of major U.S. technology companies.
• Acronym for Facebook (now Meta Platforms), Amazon, Netflix, and GoogleThe index invests in 10 stocks, including six technology companies in addition to the "FANG" companies.
• In the September 2024 regular rebalancing, Tesla and Snowflake were excluded and CloudStrike Holdings and ServiceNow were newly included.

The FANG+ Index seeks to benefit from the expansion and innovation of the digital economy by investing in these high-growth companies.

They include growth companies in a wide range of sectors, including telecommunications, entertainment, retail, cybersecurity, and cloud technology, and offer the potential for high returns but also high risk associated with market volatility.

Which mutual funds can invest in FANG+?

The main mutual fund that can invest in FANG+ is the iFreeNEXT FANG+ Index.

The fund invests in companies listed in the U.S. and aims to achieve investment results linked to the NYSE FANG+ Index (yen-based).

The FANG+ Index is a risky product with high growth potential because it invests in companies growing in technology and related fields.

What are the details of the iFreeNEXT FANG+ Index?

The "iFreeNEXT FANG+ Index" is an additional index-type mutual fund offered by Daiwa Asset Management Co.

The Fund will invest primarily in all the stocks that comprise the NYSE FANG+ Index, aiming for performance that is in line with its movements.

Fund Characteristics

• NISA eligible: Investment is possible in the NISA system from 2024 under the reserve investment limit and the growth investment limit.
• Investment Target: All stocks in the NYSE FANG+ Index.
• exchange hedgeIn principle, the Company does not hedge foreign exchange rates.

What are the latest components of the FANG+ Index?

The latest components for 2024 are as follows
The FANG+ Index is regularly reshuffled, with the most recent rebalancing taking place in September 2024.

What is the replacement history of FANG+ components?

At its inception in 2018, the components of the iFreeNEXT FANG+ Index were as follows

• Facebook (Facebook)
• Apple
• Amazon.com (Amazon.com)
• Netflix
• Google (Google)
• Alibaba
• Baidu
• Nvidia
• Tesla
• Twitter

The following stock replacements were then made.

FANG+ index stock replacement in December 2021

• Change of stocks from Twitter to Microsoft (Microsoft)

FANG+ index stock replacement in December 2022

• Alibaba to AMD (Advanced Micro Devices)
• From BaiduSnowflakeChange of issue to

FANG+ index stock replacement in September 2023

• From AMDBroadcom (Broadcom)Change of issue to

FANG+ index stock replacement in September 2024

• Excluded Tesla Snowflake and hired new Service Now (NOW) and Cloud Strike (CRWD).

After these stock replacements, the current component is now 10 stocks.

What is the percentage of each stock in the FANG+ Index?

Each stock in the FANG+ Index is invested on an "equal weight" basis.

Since the index is currently composed of 10 stocks,For each issue, the investment is theoretically just 101 TP3T each.

However, because the daily price movements of each issue are different, the ratio of each issue will fluctuate over time. Some stocks may increase above 101 TP3T while others may decrease below 101 TP3T, but these ratios are not adjusted on a daily basis.

Therefore, it should be understood that the 10 stocks are basically operated in equal allocations of 10% each.

What are the sector ratios for the FANG+ Index?

The latest sector ratios for the FANG+ Index for September 2024 are as follows

What are the management costs of the iFreeNEXT FANG+ Index?

The investment cost of the Daiwa-iFreeNEXT FANG+ Index is as follows

• Trust fees (incl. tax)/year: (%) 0.7755%

This trust fee of 0.7755% is lower than other popular stocks in the Japanese Trust NISA, such as "All Country (Orcan)It is relatively high compared to 0.05775% and others in the "0.05775%" section.

Trust fees are the cost of managing a mutual fund, and the higher they are, the greater the negative impact they have on long-term investment performance.

Especially for long-term investments, it is important to carefully check the investment cost before investing, because a small difference in compensation rates can make a big difference due to the compounding effect.

Reference:. How do trust fees affect long-term investment performance?

Differences between FANG+, GAFAM and Magnificent Seven

FANG+, GAFAM, and the "Magnificent Seven" are all different groups of stocks focused on U.S. technology stocks.
They consist mainly of major companies in the technology industry, but each has its own unique characteristics.

Difference in component stocks

• FANG+ consists of 10 stocks and GAFAM has 5 stocks.
• Magnificent Seven is the seven issues of GAFAM plus "Tesla and NVIDIA".
• The Magnificent Seven plus "Netflix, Snowflake, and Broadcom" make 10 stocks for FANG+.

Difference in coverage

• GAFAM is limited to major U.S. technology companies.
• The Magnificent Seven is GAFAM plus Tesla and NVIDIA, seven companies that have a high market capitalization and refer to giant companies that dominate the world.
• FANG+ covers the Magnificent Seven plus a broader group of innovation-driven companies.
  In the past, major Chinese companies (Alibaba, Baidu) were included, but are no longer included due to the replacement of stocks.

FANG+, GAFAM, and the "Magnificent Seven" are all different groups of stocks focused on U.S. technology stocks.
They consist mainly of major companies in the technology industry, but each has its own unique characteristics.

When will the FANG+ Index also change the stocks included in the index?

Changes in the composition of the FANG+ Index may occur on the third Friday of March, June, September, and December.

At this time, stocks will be added or excluded as deemed necessary by the Governance Committee to maintain the quality and character of the Index.
Currently, the FANG+ Index consists of 10 stocks, but may increase to 11 or more in the future.

What are the criteria for selecting stocks for FANG+?

Stocks in the FANG+ Index are selected from Internet and media-related companies with next-generation technologies.

In the selection criteria,The focus is on companies that utilize innovative technologies and business models, clearly distinguishing them from "traditional technology and service providers.

This selection criterion ensures that companies with high growth potential in the digital economy and the Internet sector are selected.

What are the specific businesses of each FANG+ component?

The following is an easy-to-understand, point-by-point explanation of the strengths of each component.

• NVDA:.NVIDIAis a pioneer in graphics processing units (GPUs) that produce high-performance computer graphics. The company is integral to the advancement of gaming, professional design, and AI technologies, which have applications ranging from data centers to self-driving cars.
• Meta Platforms (META):.Meta Platforms, formerly known as Facebook, operates the world's largest social networking site. As a platform for people to connect and share information online, its main source of revenue is advertising.
• Netflix (NFLX): Netflix is a global streaming service that provides movies, dramas and other entertainment content via the Internet. It also focuses on producing its own original content, offering viewers a new viewing experience.
• Alphabet (GOOGL):.Alphabet is the parent company of Google and operates the search engine, YouTube, Android and other platforms. It continues to lead the world and innovate in the fields of information technology and digital advertising.
• Broadcom (AVGO):.broadcomis a leading provider of semiconductors for telecommunications equipment and data centers. The company contributes to the development of high-speed communication technology and supports the foundation of data communications around the world.
• Microsoft (MSFT): Microsoft is a global provider of software, including the Windows operating system and Office suite. In recent years, the company has also focused on cloud services, mainly Azure, AI technology, and gaming business.
• Amazon.com (AMZN): Amazon is the largest online shopping company, and in addition to its e-commerce business, its cloud computing business through AWS (Amazon Web Services) is growing rapidly, establishing itself as a global infrastructure company.
• Apple (AAPL): Apple is a company that develops software and service businesses centered on hardware products such as the iPhone and Mac. The company is particularly strong in its ecosystem, and its strength lies in the collaboration between hardware and software.
• CloudStrike Holdings (CRWD): CloudStrike is a leader in cybersecurity, providing cloud-based endpoint security solutions that help companies prevent cyberattacks with its advanced AI-based defense systems.
• Service NOW:ServiceNow is a cloud-based workflow platform company that deploys solutions to streamline business processes such as IT operations management, human resources, customer service, and automation.

What are the advantages of investing in FANG + Indexes?

The advantages of investing in the FANG+ Index include the following points

Access to next-generation technologies

Because the FANG+ Index is comprised of U.S.-listed companies that leverage next-generation technologies and have a significant impact on global society,Efficiently diversify investments in a group of companies with growth potential in the technology sector.
Provide access to innovative areas such as cloud, AI, and cybersecurity.

Investment in a small group of select stocks

The FANG+ Index is comprised of a select few stocks with global recognition and influence, including Meta Platforms (Facebook), Amazon, Netflix, Google (Alphabet), and Nvidia.
These companies are at the forefront of innovation and driving the development of the digital economy.
Investors can invest in these high-growth companies in bulk.

Excellent performance potential

Historical data shows that the FANG+ Index has shown strong growth performance compared to the S&P 500 and NASDAQ 100The following is a list of the most common problems with the "C" in the "C" column.
Since growth in the technology sector is strongly reflected in stock prices, high returns can be expected in long-term asset building.

Use of Accumulated Investments

Through mutual funds linked to the FANG+ Index, daily savings investments are also available, and are not subject to short-term market fluctuations,It is a long-term asset-building strategy.
You can take a strategy to grow your portfolio over time by accumulating small amounts.

Investing in the FANG+ Index is one strategy for betting on growth in the technology sector and is a particularly attractive option for investors interested in the next generation of technology companies.

What are the disadvantages of investing in FANG + indexes?

Possible disadvantages to investing in the FANG+ index include

• High volatilityBecause the FANG+ Index is concentrated in technology giants, its price may fluctuate significantly due to market volatility.
  This could mean a sharp rise or fall in prices in a short period of time, potentially increasing investment risk.
• Concentration Risk: The risk ofBecause the FANG+ Index concentrates on specific technology companies, industry-specific issues and regulatory changes facing these companies could have a significant impact on overall investments.
• Sensitivity to changes in market conditions:.The technology industry is rapidly evolving, and the emergence of new technologies and competitors means that today's leaders are not guaranteed the same success in the future. There is a risk that changes in market conditions will reduce the value of your investment.
• Excessive expectations:.Excessive expectations for FANG+ indexes can create a disconnect from reality and make it difficult for investors to estimate realistic returns. High past performance may not necessarily continue into the future.

When considering an investment, it is important to understand these disadvantages and consider one's investment objectives, risk tolerance, and overall market conditions.

How does the FANG+ Index perform?

The performance of the benchmark index of the FANG+ Index since its establishment in 2018 is approximately 3501 TP3T.

Performance graph of the benchmark index for the FANG+ Index

How does the FANG+ Index compare to the S&P 500 and NASDAQ 100?

Below is a graph comparing the performance of the S&P 500 and NASDAQ 100, which are often compared to FANG+.

The following is a comparison of the performance of FANG+ in 2018 since its inception.

• FANG+:. Approx. 350%
• NASDAQ100:.Approx. 180%
• S&P500:.Approx. 90%

The performance of FANG+ has been outstanding, but the declines have been very large in a falling market in 2022.

Graph comparing the performance of the FANG+ Index to the S&P 500 and NASDAQ 100

Who is a good candidate for investing in FANG+ Indexes?

People who are particularly suited to invest in the FANG+ Index are those with the following characteristics and objectives

• Strong interest in the technology industry:.The FANG+ Index concentrates on leading technology companies and those with innovative business models. It is suitable for those interested in the growth potential of this sector.
• Investors seeking long-term growth:. Many of the companies included in FANG+ are companies that are expected to grow in the future. They are suitable for those who consider investing from a long-term perspective and are not swayed by short-term fluctuations in the market.
• People with high risk tolerance:. FANG+ indexes may exhibit high volatility. It is suitable for investors with some risk tolerance who can accept the risk of market volatility.
• Diversification Seekers:.The FANG+ Index allows investors to diversify their investments across multiple technology-related companies. It is suitable for those seeking investments that are not dependent on any one company or industry.

For those who fit these characteristics and objectives, it is worth considering investing in the FANG+ Index.

What are the factors behind the article "FANG+ indexing is not recommended" and the many searches for it?

Some of the criticism of the FANG+ Index can be attributed primarily to the following points

• FANG+ indexes are,Sensitive to market fluctuations and high volatilityIt is considered to be a
  This is because the majority of these companies are technology-related, so their prices tend to rise and fall dramatically with changes in the market.
• While technology companies are innovative and have high growth potential,High risk in long-term investments.It is considered to be a
  Due to rapid changes in the industry and the emergence of new technologies,Current leader firms may not necessarily hold the same position in the future.
• Companies in the FANG+ Index are showing high growth potential today, but this will not necessarily continue for decades to come.
  Depending on market conditions and technological evolution, the pace of growth may slow down.
• Long-term investments, including those in the "nenreitate NISA" system, are recommended to seek stable asset building through risk diversification; the FANG+ Index is not suitable for investors with low risk tolerance due to its concentration in certain sectors.

In long-term investments, concentrating on a particular group of stocks without diversification is risky.

There is no guarantee, though, that FANG stocks will still be leading the industry in 10 years,Stocks in the FANG+ Index are reviewed on a regular basis, and support is provided by stocks that have maintained performance in addition to the FANG stocks.
This can be a source of some relief for investors.

What is the future and outlook for the iFreeNEXT FANG+ Index?

The iFreeNEXT FANG+ Index is a fund that aims to directly benefit from the growth of the digital economy by investing in a diversified portfolio of technology leaders.

The September 2024 rebalancing adjusts the composition of the index to accommodate companies that continue to grow, with the exclusion of Tesla Snowflake and the inclusion of new Cloudstarlike and Service Now companies.

Such rebalancing is an important process that allows the iFreeNEXT FANG+ Index to flexibly respond to next-generation technology advancements and market changes, and to aim for sustainable performance.

Key Factors for Future Prospects

• Sustained growth in the technology sector:.Companies in the FANG+ Index are at the heart of next-generation technologies such as AI, cloud computing, cybersecurity, and social media.
  Demand for NVIDIA's AI semiconductors, CloudStrike, and ServiceNow's cybersecurity cloud services is growing rapidly in these sectors and is expected to continue to grow.
  With this rebalancing, the FANG+ Index may continue to maintain its high growth potential.
• Accelerating digitalization of the global economy:.The global economy continues to accelerate digitization even after the pandemic. Demand for cloud services, remote working, and e-commerce continues to increase, and the companies in the FANG+ Index are at the center of this digital trend.
  Amazon's online shopping and cloud services, Meta's Metaverse development, and Netflix's streaming services,Growth in the digital sector is expected to continue.
• Risk Factors: 1.While the growth potential of technology companies is a major advantage, the FANG+ index also carries certain risks due to its concentration.
  For example, stricter regulations, higher interest rates, and increased competition in the technology sector could impact growth. In particular, the impact of government antitrust and data privacy regulations is a major risk factor for these leading companies.

Future Outlook for iFreeNEXT FANG+ Index

The future of the FANG+ Index depends on the growth of the technology sector, which is expected to continue to perform well over the next few years.
AI and cloud-related companies in particular are expected to play an even more important role in the late 2020s.
In addition,The sustained profitability of companies and the flexibility of stock selection through rebalancing are factors that contribute to the stability of the overall index.

Overall, the iFreeNEXT FANG+ Index remains a promising long-term investment strategy for betting on the technology sector, but investors should make decisions based on a thorough understanding of the growth potential and risks.

summary

We have taken a closer look at the FANG+ Index and the mutual fund linked to it, the iFreeNEXT FANG+ Index.

When performance is a top priority, investing in the NASDAQ 100 is generally considered a good choice. However, FANG+, which focuses on the best performing stocks in the NASDAQ 100, is very attractive from a performance standpoint.

In a sense, it is the strongest.

Although FANG+ is a popular mutual fund issue for the "Asatate NISA," it still entails a certain level of risk when considering long-term investments of 20 to 30 years.

If you want to invest in a leave-it-at-home basis, a more diversified mutual fund, e.g.Global Decentralized OrcanWe recommend that you choose a product such as

Personally, I chose the "Daiwa-iFreeNEXT FANG+ Index" as an investment issue for my "nasate" NISA.

I personally believe that in order to take full advantage of the tax benefits of NISA, it is desirable to invest for high performance.

It is unknown where FANG+ will be in 10 years, but we intend to invest aggressively with an emphasis on performance.