FNGS ETF

Upgrading Microsectors FANG+ ETN to a tactical buy due to potential near-term gains and a possible "melt-up" scenario for the Mag-7 stocks. FNGS, with its concentrated portfolio of 10 stocks, offers targeted exposure, unlike overly diversified ETFs, enhancing potential returns while managing risk. Despite high valuations, the stability and profitability of the Mag-7 stocks justify the investment, supported by strong technical analysis indicating a move to old highs.

FNGS tracks an index of 10 mega-cap tech-focused stocks commonly referred to as FANG+. The strategy has significantly outperformed the broader market in recent years but also faced a deeper drawdown during the 2022 bear market. FNGS can work as a tactical trading instrument but is likely too risky to completely replace more diversified ETFs with a balanced equity allocation.

MicroSectors™ FANG+™ ETN offers exposure to the NYSE FANG+ Index, consisting of 10 highly liquid stocks. FANG stocks are no longer outperforming the S&P 500 and show signs of a downtrend. The FNGS ETF carries credit risk from the issuer, Bank of Montreal, and is vulnerable to market volatility and corrections.

The MicroSectors FANG+ ETN offers investors pure play exposure to big tech companies like Microsoft, Apple, Google, Meta, and Amazon. These companies are well positioned to benefit from technological trends and continue their winning streak. We believe that FNGS will continue to outperform the major indexes going forward.

The 'magnificent seven' tech stocks, including Apple, Microsoft, Google, Amazon, Tesla, Meta, and Nvidia, have significantly outperformed the market in 2023, with the MicroSectors FANG+™ Exchange Traded Notes up over 63%. The concentration of market gains in these few names indicates an unhealthy market. Investors should consider selling FNGS now, as poor market breadth and elevated interest rates could lead to a risk-off move in the near future.

The technology sector has been at the forefront of the stock market rally in May, primarily thanks to the artificial intelligence (AI) mania.

For investors seeking momentum, MicroSectors FANG+ ETN FNGS is probably on radar. The fund just hit a 52-week high and is up 55% from its 52-week low price of $17.82/share.

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