The BetaShares NASDAQ 100 ETF (ASX: NDQ) is my favourite of the ETF options provided by Betashares.
Betshares is a sizeable provider of ETFs and other funds that are traded on the ASX. It manages over $7.5 billion of assets. BetaShares is owned and managed by its Australian based management team along with a strategic shareholding from Mirae Asset Global Investment Group one, of Asia’s largest asset management firms. As at May 2019, Mirae manages over US$135 billion..
An ETF is a way to buy a fund through an exchange. There are various types of funds including index funds which give investors access to good diversification with one investment.
BetaShares NASDAQ 100 ETF (ASX: NDQ)
One of the main things that holds me back from investing in broad and diverse ETFs like Vanguard Australian Share ETF (ASX: VAS) or iShares S&P 500 ETF (ASX: IVV) is that they own a lot of shares I don’t want exposure to, or at least to the level that I’d prefer.
However, the BetaShares NASDAQ 100 ETF gives large exposure to the big US technology giant, which I do want exposure to.
The ETF invests in 100 of the largest businesses listed on the US-based NASDAQ stock exchange.
Based on the holdings on 12 July 2019, 11.2% of the ETF is invested in Microsoft shares, 10.4% in Amazon, 9.9% in Apple, 7.9% in Alphabet and 5.2% in Facebook. That means that 44.6% of the ETF is invested in these five tech giants, almost half.
Whilst solely investing in this ETF wouldn’t provide much company diversification, I think it’s excellent for diversification for two other reasons:
Global Earnings
When you look at the revenue and profit generated by our domestic giants like Woolworths Group Ltd (ASX: WOW) and Commonwealth Bank of Australia (ASX: CBA), their earnings essentially just come from Australia and New Zealand.
However, when you look at Apple, Microsoft, Alphabet etc, they probably generate profit from almost every country in the world, which you just don’t get from many ASX businesses.
High Quality Tech Shares
Alphabet, Microsoft, Amazon and so on have global market leading offerings in their product categories.
The ASX isn’t known for its tech shares, although there are a few good smaller ones.
When you think about what people are spending new money on these days, compared to 20 or 30 years, it’s things like smartphones (Apple and Alphabet), online subscriptions (Amazon Prime), games consoles like Xbox (Microsoft). Our attention is also worth a lot of advertising revenue (Facebook and Alphabet).
Summary
Although I don’t (yet) own NASDAQ 100 ETF in my portfolio, it would certainly be one of the top ETFs I’d want to think about. Its annual management fee isn’t the cheapest at 0.48% per year, but it’s cheaper than many fund managers.
Other growth ideas to go alongside this ETF would be the rapidly growing businesses in the free report below.
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