Does the BetaShares Nasdaq 100 ETF share price fall make it a no-brainer buy?

This popular ETF could be in the buy zone right now…

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

After a breathtaking run over January, the BetaShares Nasdaq 100 ETF (ASX: NDQ) has been taking a bit of a breather of late. BetaShares Nasdaq 100 units rose from $24.60 in late December to $28.32 by 8 February – a gain of more than 13.5% in just over a month.

But since 8 February, investors have cooled off a little on this ASX exchange-traded fund (ETF). As it stands today, the BetaShares Nasdaq ETF is currently at $27.95 per unit, down more than 1.3% from its early February high:

So does this fall in value make the Nasdaq 100 ETF a no-brainer buy for ASX investors today?

person thinking, contemplating, considering

Image source: Getty Images

Tech, tech and more tech

Well, let's backtrack a little. The BetaShares Nasdaq 100 ETF is an index fund. But it doesn't hold or track ASX shares. Instead, it holds 100 of the largest US shares listed on the American NASDAQ stock exchange. The NASDAQ is known for being the exchange that most tech companies choose to list on.

As such, its largest holdings are the US tech giants we all know and may, or may not, love. These include Apple Inc (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Amazon.com Inc (NASDAQ: AMZN), and Netflix Inc (NASDAQ: NFLX). Not to mention the likes of Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL), Tesla Inc (NASDAQ: TSLA), and Starbucks Corporation (NASDAQ: SBUX).

So the performance of the BetaShares Nasdaq ETF largely rides or dies on the performance of these companies.

Some of these names have indeed had a rough February thus far. There was the interesting debacle that was Alphabet's artificial intelligence display last week, which has seen the company lose around 12% of its value over the past week for one.

But Amazon has also seen its share price cool off this month. It's probably these two US tech giants that are responsible for the pullback we have seen in the unit price of the BetaShares Nasdaq 100 ETF.

So this brings us to the question of whether this ETF is in the buy zone today.

Why the BetaShares Nasdaq ETF's pain is our gain

Well, I think it is. An investment in the NASDAQ is an investment in American tech. And American tech has led the way for global innovation over the past two to three decades. I think companies like Apple, Tesla, Netflix, Alphabet, and Amazon will be larger, healthier, more dominant and more profitable in ten years' time than they are today.

I can't see a scenario where a competitor comes in and takes Apple's place at the top of the world's consumer electronics market.

Or dents the incredible market share that Alphabet's Google has in search.

Or Amazon's incredibly dominant e-commerce platform (not to mention its cloud-based AWS division).

An investment in the BetaShares Nasdaq ETF would have been incredibly lucrative ever since this ETF was first listed. Since its inception in 2015, investors have enjoyed an average annual return of 15.65% per annum.

In my view, all of this adds up to a buying opportunity for the BetaShares Nasdaq 100 ETF today.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Alphabet, Amazon.com, Apple, Microsoft, Netflix, Starbucks, and Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon.com, Apple, BetaShares Nasdaq 100 ETF, Microsoft, Netflix, Starbucks, and Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple, short April 2023 $100 calls on Starbucks, and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Alphabet, Amazon.com, Apple, Netflix, and Starbucks. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Girl with painted hands.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a disappointing Tuesday for investors.

Read more »

A smiling florist gets some good news on his laptop and tablet.
Broker Notes

What is Morgan's view on Navigator Global Investments shares after update

Morgans sees further upside for this stock.

Read more »

Two happy and excited friends in euphoria holding a smartphone, after winning in a bet.
Share Gainers

Why Artrya, Cleanaway, DroneShield, and Nuix shares are pushing higher today

These shares are outperforming on Tuesday. But why?

Read more »

Cheerful businessman with a mining hat on the table sitting back with his arms behind his head while looking at his laptop's screen.
Broker Notes

What are brokers predicting for BHP shares over the next 12 months?

Have the mining giant's shares reached their peak? Or can they keep climbing? Let's find out.

Read more »

An older man wearing glasses and a pink shirt sits back on his lounge with his hands behind his head and blowing air out of his cheeks.
Share Fallers

Why ANZ, Challenger, Hub24, and Lynas shares are dropping today

These shares are under pressure on Tuesday. But why?

Read more »

A young woman holds her hand to her mouth in surprise as she reads something on her laptop.
Share Market News

4 ASX shares tipped to fly 100% to 125% higher

Brokers rate all of these ASX shares a strong buy.

Read more »

Three guys in shirts and ties give the thumbs down.
Share Market News

3 ASX 200 shares tipped to tumble 10% (or more) in the next 12 months

Here's why the shares are tipped to drop, and by exactly how much.

Read more »

A young woman wearing a red and white striped t-shirt puts her hand to her chin and looks sideways as she wonders whether to buy ASX shares
Broker Notes

Buy, hold, sell: Aristocrat, Lovisa, Bendigo Bank shares

Here's what some experts think.

Read more »