The BetaShares NASDAQ 100 ETF (ASX: NDQ) is a popular exchange traded fund (ETF) on the ASX. However, it is not the most popular ETF covering international shares on the ASX.
That honour goes to the iShares S&P 500 ETF (ASX: IVV), closely followed by the Vanguard MSCI Index International Shares ETF (ASX: VGS).
But the NASDAQ 100 ETF is still an index fund. It covers the 100 shares on the US's NASDAQ-100 (INDEXNASDAQ: NDX). The NASDAQ is well-renowned for hosting some of the largest tech shares on the US market.
While 'old school' companies like Berkshire Hathaway, Coca Cola, and Bank of America list on the New York Stock Exchange, the NASDAQ hosts the likes of Apple, Microsoft, Alphabet, Amazon.com, and Tesla.
It also hosts a diverse range of other shares as well, of course. These include Palo Alto, Netflix, Costco, Adobe, Starbucks, and Airbnb.
Now, there are many, many ETFs on the ASX that cover corners of the global tech share space. Take the BetaShares Global Cybersecurity ETF (ASX: HACK). It (as you can probably guess) tracks a portfolio of cybersecurity companies.
The ETFS FAANG+ ETF (ASX: FANG) holds only 10 shares, including Apple, Alphabet, Microsoft, Meta Platforms, and Tesla.
Then there is the BetaShares Cloud Computing ETF (ASX: CLDD). It focuses on companies in the cloud computing industry, including Netflix and Salesforce.
The ETFS Morningstar Global Technology ETF (ASX: TECH) holds a diversified basket of 39 shares sourced from various corners of the global tech space.
But I prefer the BetaSahres NASDAQ 100 ETF to all of these other ASX tech ETFs.
This is for two reasons.
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Why I prefer NDQ to any other ASX tech ETF
The first is sheer performance. Despite losing more than 12% over the six months to 31 July 2022, the NDQ ETF has still managed to give investors an average annual return of 20.69% over the past five years.
That runs rings around all of the other tech ETFs listed above, with the possible exception of FANG.
The FANG ETF has only been around for just over a year. But its benchmark index has reportedly returned an average of 24.6% per annum over the same period.
The second is diversification. NDQ has approximately 100 underlying holdings, far more than any of the above ETFs.
Among these 100 stocks are cybersecurity shares like Palo Alto, almost all of the shares in the FANG ETF, and cloud computing shares like Netflix.
A sector-specific ETF like HACK has its own diversification risks, seeing as all of the holdings come from the same sector.
But NDQ's diversification risk is far lower seeing as it represents so many different underlying industries.
This diversification, together with NDQ's superlative performance figures, is enough to convince me that I would rather have the NDQ ETF in my portfolio over any other tech-based ETF today.
