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FAANG is not a romantic vampire novel, nor some fancy Florida snake farm. It’s an acronym for a quintet of US tech companies driving markets: Facebook, Apple, Amazon, Netflix, and Google’s parent company, Alphabet. They have contributed heavily to market performance recently (FIGURE 1). However, some question the long-term sustainability of these returns. They point to concentration risk in cap-weighted indices, such as the S&P 500 Index,1 and a potential FAANG bubble thanks to possibly overinflated valuations (FIGURE 2). While FAANG could continue driving strong returns, make sure your exposure is intentional. 


FAANG Stocks Dominate (% returns as of 3/31/21)

Data Source: S&P Capital IQ; Calculations: Hartford Funds, 4/21. Past performance does not guarantee future results.


Too Much of a Good Thing?

FAANGs are becoming a bigger part of the S&P 500 Index. Their valuations, as measured by their price/earnings (PE) ratios,2 have generally been higher than the Index's.

  2012 2013 2014 2015 2016 2017 2018 2019 2020 2021*
% FAANG Weighting in S&P 500 Index 6.2 6.5 6.9 8.9 8.8 10.8 11.4 12.8 17.2 16.1
FAANG P/E Ratio 15.7 22.6 22.0 22.9 23.9 32.3 22.0 31.5 39.9 39.9
Average S&P 500 Index P/E Ratio 16.5 18.3 20.2 23.2 23.4 24.5 19.0 23.4 40.8 42.8

Data Source: FactSet, 4/21. FAANG P/E Ratio is calculated using a weighted average.

*2021 data is through 3/31/21

Talk to your financial professional today to make sure your portfolio isn't overly concentrated in a handful of stocks.

1 S&P 500 Index is a market capitalization-weighted price index composed of 500 widely held common stocks. Indices are unmanaged and not available for direct investment.

2 Price/earings (P/E) is the ratio of a stock's price to its earnings per share.

Investing involves risk, including the possible loss of principal.

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The material on this site is for informational and educational purposes only. The material should not be considered tax or legal advice and is not to be relied on as a forecast. The material is also not a recommendation or advice regarding any particular security, strategy or product. Hartford Funds does not represent that any products or strategies discussed are appropriate for any particular investor so investors should seek their own professional advice before investing. Hartford Funds does not serve as a fiduciary. Content is current as of the publication date or date indicated, and may be superseded by subsequent market and economic conditions.

Investing involves risk, including the possible loss of principal. Investors should carefully consider a fund's investment objectives, risks, charges and expenses. This and other important information is contained in the mutual fund, or ETF summary prospectus and/or prospectus, which can be obtained from a financial professional and should be read carefully before investing.

Mutual funds are distributed by Hartford Funds Distributors, LLC (HFD), Member FINRA|SIPC. ETFs are distributed by ALPS Distributors, Inc. (ALPS). Advisory services may be provided by Hartford Funds Management Company, LLC (HFMC) or its wholly owned subsidiary, Lattice Strategies LLC (Lattice). Certain funds are sub-advised by Wellington Management Company LLP and/or Schroder Investment Management North America Inc (SIMNA). Schroder Investment Management North America Ltd. (SIMNA Ltd) serves as a secondary sub-adviser to certain funds. HFMC, Lattice, Wellington Management, SIMNA, and SIMNA Ltd. are all SEC registered investment advisers. Hartford Funds refers to HFD, Lattice, and HFMC, which are not affiliated with any sub-adviser or ALPS. The funds and other products referred to on this Site may be offered and sold only to persons in the United States and its territories.

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