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Big Tech's gains are nothing special, quant study says

Many Wall Street careers have been built touting the exceptional capacity of Big Tech stocks including Amazon.com and Alphabet Inc. to outrun everything else in the market. Yet a recent study from the Singapore Management University argues the superpower of the Faang cohort is exaggerated.

Foto: Strf/AP/Ritzau Scanpix

The bulk of their gains since 2013 came thanks to a broader market appetite for large companies and those with strong earnings growth, according to Roger K. Loh, an associate professor of finance who studied how investment factors influence returns. The intrinsic magic or otherwise of the Faang label -- which includes the company formerly called Facebook, Apple and Netflix -- has little to do with it.

Loh found that the group's impressive total returns, at 2.6% a month, dwindled to an actual outperformance of as low as 0.4% when controlling for the impact of favorable trends in the rules-based world of factor investing...

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