FANGS To Get Replaced ...India too will get Its own FANGS Stocks

Do you have any idea about the return expectation from the investment portfolio in the coming decade? Do you know what is going to be a new definition of clients and how their risk profiling will be changed? Well before that, there are many other factors which are going to change and we need to understand them before it becomes surprise shock.

FANG ruled the US index and made investors significant rich. In short, it helped to replace the falling manufacturing and trade war impact on the Index. As per Institutional Global Equity investors and analyst it is projected that U.S - 60/40 portfolio to provide an annual return of just 4.2% over the next 10 to 15 years compared to 5.4% a year ago. Since 1980, the return on such a portfolio in the US has been a compound annual growth rate of 10.2%. This is the place where a new sector will be coming up to make the return attractive for Equities.

FANG is a combination of technology and E-commerce. Now the same will be getting broader enough to make investors earn returns and also other institutional investors. Don’t forget that the US has pension funds and other social funds corpus as institutional to deploy. This is the place where the birth of new sets of FANG comes into place. As the sectors will be surprised the companies will be too. Over the next decade, investors will need sectors and companies to earn returns. FANG could be challenged in the coming decade.

In order to achieve higher return low rated bonds will be in the favourite game as they are similar to equities. Defaults and high returns both will chase as that is the alternative asset class for investments. The millennial and ageing population are the two categories of investors who will be there in the coming decade. Client risk profiling will be based on behavioural aspect rather than basic risk profiling. Client risk profiling will change and that will change the demand for fund management or sector/asset combination. AI-based behavioural finance will be adopted to calculate the risk perception for an investor. This is the place where the millennial and ageing population will come into play.

In the coming decade fund management will be challenging as technology will change the existing the business model and no one knows which one will come up as the next FANG. One might be late to identify the next FANG.  Now why we need more FANG or replacement of FANG since global population aged above 65 will expand by 60% to 1bn by 2030. Hence the challenge for global fund management lies to provide the returns.

Global indexes will take significant change across every country in terms of sector allocation. The old allocations are going to be shredded slowly in the coming decade.

5G related sectors will be the biggest challengers to the global index current sector exposure. Robotics, autonomous vehicles, artificial intelligence, data analytics and cybersecurity and any such business model connecting with billion populations will be the challengers. 5G will be the key force behind this sector allocation change over in the coming decade.

This decade the technology stocks will not be doing so great as compared to the technology-driven- makeover of new companies or industries. Pandemic has changed our perception and requirement for health care. Healthcare-related IT companies will be finding significant space in the index. Education-one of the most important eye-opener for the Indian economy during pandemic where online education has dramatically changed the perception of education and to the behavioural aspect of parents particularly from remote locations. Edu–tech companies will also be finding space in the index in coming days. Don’t be surprised if Biyjus get listed in the next 2 years.

In a country like India alone we find in a research report that India's education market is expected to grow 2x from $ 63 Bn in 2016 to $ 126 Bn in 2022 at 12% CAGR. Spends on K12 education market expected at US$55Bn by 2022. Post K12 education market at US$71Bn. Now when we take up other emerging countries and any strong company coming up with a single entity like FANG will change the landscape of the business.

 5G will be a revolution behind the health and education sector in the coming decade. If both the segments are explored be ready for another Facebook or Google-type connecting billion populations. Green revolution like energy segment –EV, Green hydrogen & Solar and wind energy. Already in Europe and in many other countries EV and alternative energies are going to change the future of fossil fuels.  

FANG will be impacted by digital taxes as its being planned across many countries. A new breed of companies is required to create alpha for global institutional investors.  Countries like India will witness sectors or companies like Paytm, Biyjus, Zomato, Phonepay PolicyBazar, Bigbasket, Groffers to get listed and find India’s FANG stocks.

Its the demand for returns which will drive them to get listed and create a new sector's contribution to the index returns as these business models are linked with masses and endless consumption-driven.

To conclude Among the 20 main Euro Stoxx 600 groups, healthcare tops the charts with 15.6%. These percentages are going to increase in the coming decade.  The story of FANG will have new sets of competitors created by the FANG itself to overthrow them out. This FANG discovery and invention will happen across all major economies in search of returns from the index.

We have come up with a series on Global Institutional Investment change over projected in the coming decade. These articles draw lines between the upcoming changeovers to the global markets and economy.  We will be covering global as well as hidden gems in India which will change the landscape in the coming decade for investment returns theme or stock portfolio. We will also be sharing the new insights on client investment and its returns behavioural changes expectation in this decade.