The ASX of today is not the ASX of yesteryear. Even as recently as ten years ago, it was pretty difficult to find more than a handful of quality ASX tech shares on the market. But fast forward to today, and there are countless tech fan favourites available.
From Xero Limited (ASX: XRO) to WiseTech Global Ltd (ASX: WTC), from Zip Co Ltd (ASX: ZIP) to Altium Limited (ASX: ALU), the ASX is certainly an exciting place for many tech enthusiasts.
It's a similar story for access to Nasdaq stocks. The Nasdaq is one of the two major stock exchanges in the United States. It is famous for housing most of the US's largest and most well-known tech shares. That's everything from Apple, Microsoft, Amazon, Google-owner Alphabet to Netflix, Tesla, PayPal, and Airbnb.
However, until very recently, the ASX was home to only one exchange-traded fund (ETF) that tracked the Nasdaq Index (two if you include the currency-hedged alternative). That ETF was the BetaShares NASDAQ 100 ETF (ASX: NDQ), alongside its hedged sibling – the BetaShares NASDAQ 100 ETF – Currency Hedged (ASX: HNDQ).
It was only in August of this year that we saw a rival launch when the Global X US 100 ETF (ASX: N100) was added to the ASX.
This means ASX tech investors have a choice of going for ASX tech shares like Xero, WiseTech Global, and Zip, or else opting for one of these Nasdaq ETFs.
So which would I choose?
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Would I buy ASX tech shares or a Nasdaq 100 ETF?
First up, I don't own ASX tech shares. However, I do own the hedged iteration of the BetaShares Nasdaq 100 ETF. That should answer this question, so see you next week.
No, in all seriousness, I have great respect for most of the ASX's best tech stocks. The success of WiseTech Global and Xero has made not owning them over the past five years a painful experience.
However, I have just never been comfortable investing in these companies. Xero clearly has a great product to offer. But its international rival Quickbooks, owned by the US giant Intuit, has always given me pause. Intuit is a mountainous US$148.2 billion ($233 billion) company, which makes the $14.8 billion Xero look like a relative molehill.
If Intuit decides to try and cut Xero's lawn, it could lead to a bad outcome for shareholders.
WiseTech is also an interesting one. It also obviously has a great product to offer with its flagship CargoWise logistics platform. But this is an area I just don't understand too well, and thus can't justify an investment. Plus, as with Xero, its shares have rarely looked cheap to me.
In stark contrast, a Nasdaq ETF is jam-packed with companies that are unrivalled in scope, scale, and dominance. Apple, Microsoft, Amazon, Netflix… these are names that I feel far more comfortable owning by proxy. Additionally, I was able to buy them at compelling prices when I invested in the Nasdaq ETF.
I haven't ruled out buying ASX tech shares. But until now, a Nasdaq investment has just made more sense for my own investing style.
