3 Funds, 3 Stocks to Tap the Tiny Tech Trend
It's no secret that large technology firms have led the way for much of the bull market. By now, every investor knows that FANG stands for Facebook, Amazon.com, Netflix and Google (although Google is now Alphabet). From the beginning of the bull market in 2009 through 2018, tech stocks in the large-company Standard & Poor's 500-stock index edged out tech stocks in the small-cap S&P SmallCap 600 by a half-percentage point per year, on average. In 2019, Big Tech pulled in front big time, returning 50.3%, compared with 39.6% for small-tech firms.
But small tech firms may be poised to close the gap, says Jim Paulsen, chief investment strategist at market research firm Leuthold Group. The "mini FANGs" (as he likes to call them) are currently trading at about the same valuation as big tech names, when small fries have historically commanded a premium. And analysts estimate that over the next three to five years, profits for the small tech stocks will increase at twice the rate of big-tech earnings.
Although small stocks tend
