FNGU: My AI Play

FNGU is a leveraged instrument that attempts to return 3x the returns of the average of the 10 underlying big tech stocks. I have always found it hard to determine which among the tech stocks will perform the best. This instrument is unique in that it shields us from individual stocks through a basket approach. At the same time, the leverage allows for the generation of returns equivalent to, and in many situations, greater than the average of the underlying stocks.

FNGU Constituents

When we review the 10 underlying stocks, we can see that they are the giants of the tech sector. What I would submit is that they are also going to be the giants of the AI boom. And we are already seeing indications of that. While there will be startups and upstarts that participate in the AI boom, the big tech companies are all already into it. And given the large amounts needed to invest in AI, these tech stocks are perfectly positioned to reap the bulk of the benefits as AI adoption increases.

Trending

We know that this year the big tech stocks have performed particularly well. Their trending is still strongly bullish. We can see from the performance table below that FNGU has actually outperformed all of the underlying stocks and by a wide margin.

Performance

You can check for yourself. Those numbers are right.

Note that the returns are great because this year has been a particularly good year for the tech sector. The trending has been consistently bullish except for brief periods. But one has to be careful as it can go down as fast or faster than it goes up. The leverage works both ways.