The Global X Fang+ ETF (ASX: FANG) is an exchange-traded fund (ETF) that aims to provide investors with exposure to companies that are "at the leading edge of next-generation technology that includes household names and newcomers", according to provider Global X.
Warren Buffett, the legendary investor who has led Berkshire Hathaway to become one of the world's largest and most diversified businesses, has regularly indicated that he wants to own wonderful companies (at fair prices).
Berkshire Hathaway has invested in names like Coca-Cola, American Express, Bank of America, Apple and Alphabet.
But, Global X Fang+ FANG ETF is a very tech-focused fund, which is something that Berkshire Hathaway hasn't really leaned into over previous decades.
Let's take a look at how the Global X Fang+ ETF has been constructed before my concluding thoughts on whether Buffett would invest.
Ten tech titans
The Global X Fang+ ETF has 10 holdings, which are ten of the largest tech businesses listed in the US.
Currently, those positions are: Alphabet, Broadcom, Apple, Crowdstrike, Nvidia, Amazon.com, Microsoft, ServiceNow, Meta Platforms and Netflix.
These businesses are from an array of technology sectors including smartphones, online advertising, AI, cybersecurity, advanced chips, e-commerce, office software, social media, video gaming, online video and cloud computing. These are areas that have changed or are changing our way of life the most.
The goal of the Global X Fang+ ETF is that roughly every position has an allocation of around 10% of the fund. These positions are regularly re-weighted to ensure they provide investors with equal exposure.
The annual management fee of the fund is 0.35%, which I think is fairly reasonable considering the specific exposure it provides.
It has performed very strongly, though past performance is not necessarily a reliable indicator of future performance. The Global X Fang+ ETF has impressively returned an average of 25.5% per year over the last five years. I'm not expecting the next five years to be as strong.
Would Warren Buffett be interested in the Global X Fang+ ETF?
It's clear to me that this fund gives investors exposure to some of the best businesses in the world.
However, there are a couple of things to keep in mind. Firstly, these businesses are not trading at cheap prices – quite the opposite.
Second, they are generally investing heavily in AI and related expenditure. So far, it's not very clear at this stage to me how they're going to collectively generate the revenue and profit to justify this spending, which adds uncertainty.
Finally, when it comes to Warren Buffett, he likes to stay within his 'circle of competence', meaning only investing in businesses that he understands so that he can evaluate them properly. I think this point would be a key reason why Buffett himself would choose to invest in specific businesses such as Apple (as he has done) and perhaps Alphabet rather than the ETF as a whole.
For Aussies wanting exposure to the US tech sector, this is a very effective way to do it, though this doesn't seem like an opportunistic time to invest. Some of the ASX's leading companies do look a lot cheaper and better value.
The post Would Warren Buffett buy Global X Fang+ ETF (FANG) units? appeared first on The Motley Fool Australia.
Bank of America is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, Berkshire Hathaway, CrowdStrike, Meta Platforms, Microsoft, Netflix, Nvidia, and ServiceNow. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Broadcom and has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Berkshire Hathaway, CrowdStrike, Meta Platforms, Microsoft, Netflix, Nvidia, and ServiceNow. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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