What if you had invested in Netflix 15 years ago, back when it rented DVDs by mail? Or Amazon when it was just an online bookseller? What about Google before it was added as a verb in the dictionary? If only you had invested in Apple or Facebook before they infiltrated every aspect of our everyday lives.
These top five companies in the U.S. — Facebook, Apple, Amazon, Netflix, and Google (FAANG) — currently make up nearly one-fifth of the S&P 500, or essentially one-fifth of the U.S. economy. But back when they were newly IPO’d with share prices ranging from $1 (Netflix) to $84 (Google), little was known of these companies and even less was known about their future growth. In the past year, Facebook share prices hit a peak price of $384/share, a 911% increase from its IPO price of $38/share in 2012. Google share prices have increased 3,430% since it IPO’d in 2004 and Netflix share prices have increased 700% since it IPO’d in 2002. While some early ventures failed, FAANG represents the best-case scenario for long-term, secular investment stories that were minimally impacted by short-term economic trends.
Instead of wondering where you’d be if you had invested in Netflix 15 years ago, ask what would happen if, today, you invested in the next wave of tech innovation companies that FAANG and thousands of others rely on to grow, expand, and innovate? Investing in AI, machine learning, and deep learning companies that have customers spread across dozens of industries is the safer, more diversified, cutting-edge secular growth investment strategy for those lamenting their lack of foresight a decade ago.
Now might not be the time to invest in Google, Slack, Dropbox, or Zoom, but it is the time to invest in the recently IPO’d security technology all four of them (plus thousands of others) use. Zscaler is that company and is currently the number one holding of our AI and Deep-Learning ETF, called LRNZ. Since Zscaler IPO’d in 2018, it has followed a similar secular growth pattern as FAANG, with share prices increasing 1,277% from an IPO price of $26.50/share to a peak of $365/share in 2021.
Nvidia is an AI hardware and software company that operates in more than 15 industries, including flood relief radar monitoring, FedEx supply chain logistics, Academy Award nominees’ special effects, and Stanford University’s medical testing. It is as diversified as they come, while also being at the forefront of modern AI technology. Nvidia is a top 5 LRNZ holding and has seen share prices increase 2,642% from an IPO price of $12/share in 1999 to a peak of $329/share in 2021.
While FAANG involves consumer staples or have become consumer staples themselves, our LRNZ ETF is made up of those companies’ staple technologies, softwares, and platforms. AI and deep learning are becoming the new and innovative backbones of the modern economy. The TrueShares LRNZ ETF is a consolidated portfolio of 23 AI and deep-learning companies, like Zscaler and Nvidia, that everyone from startups to FAANG rely on to gain an edge in this winner-takes-all market. The LRNZ ETF therefore offers a secular growth opportunity for a long-term investment strategy with lower risk for investors seeking an early entry point into the next FAANG.
