FAANG stocks lose sheen on weakening US dollar, poor growth outlook

International funds had a stellar run over the last few months thanks to the buoyancy in the US markets and the dollar.  

However, in the past few weeks, these funds are seen losing their sheen as US stocks, particularly from the technology space, have run into rough weather amid worsening growth outlook. The so-called FAANG trade — Facebook, Apple, Amazon, Netflix and Google (Alphabet) — had gained currency this year. Even some of the domestic mutual funds through their international funds were seen taking bets on these tech stocks.  

These stocks have come off between 11 per cent and 23 per cent in the last four months. The weakening dollar in recent weeks has worsened the returns.

"While the new investors in these funds are essentially staring at losses, the year-to-date returns are still positive. These international funds are a good diversification tool as they act as a natural hedge to the domestic volatility, particularly in the currency markets," a fund manager said.