A common theme running through markets in 2017 was the strong performance of the FANG’s: an acronym for Facebook, Amazon, Netflix and Google. These stocks are seen as a bell-weather for the performance of “new economy” companies.
For the 12 months to December 2017, these four companies have seen an average price gain of 49.3%, which compares to a gain of 21.8% for the total US share market.
A closer examination reveals that technology companies were some of the best performers last year, which is one of the reasons why growth managers have performed so well in 2017.
Markets with a high weighting to the technology sector performed strongly during the 2017 calendar year as shown in the below chart. Australia’s small weight to this sector is one of the major reasons it has underperformed international shares. Australia’s technology sector represents only 1.9% of the total market and returned an impressive 28% in the 12 months to 31 December 2017. By contrast however, technology companies make up 26% of the investible companies in emerging markets and they returned over 48% over the same period.
Source is Factset & MSCI Rimes. Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.