Is it too late to buy the BetaShares Nasdaq 100 ETF (NDQ) trading near record highs?

Is this a good time to invest in US stocks?

| More on:
A businessman holding a world globe in one hand, representing global investment.

Image source: Getty Images

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

The Betashares Nasdaq 100 ETF (ASX: NDQ) has had a solid 2023, with the exchange-traded fund (ETF) up by 50% year to date. Is it too late to invest? I'm going to try to answer that question in this article.

Firstly, let's remind ourselves what the ETF actually comprises because that's key to understanding the investment.

BetaShares Nasdaq 100 ETF (NDQ) portfolio

The NASDAQ 100 holds 100 of the largest non-financial companies on the NASDAQ exchange in the United States. It includes companies introducing new products and services that are changing the world.

Many of the most powerful global businesses are within this portfolio, including Apple, Microsoft, Alphabet (Google), Amazon.com, Meta Platforms (Facebook and Instagram), Tesla, Nvidia and Costco.

Other portfolio leaders include Advanced Micro Devices, Adobe, Booking, Intuitive Surgical, Mondelez International, PayPal, AirBnB, ASML and so on.

There is a significant technological element to a lot of the companies involved, which I think is an attractive feature.

Close to record highs

The NDQ ETF has recovered from the pain of 2022 and has done very well. It's only slightly lower than where it was in mid-December.

Investors have shrugged off the high interest rates and are now looking ahead to when interest rates may be lower.

Earnings at many of the NDQ ETF's holdings have lifted and held up better than what investors may have expected a year or two ago, considering how much higher interest rates are compared to 2021.

Is it too late to invest in the NDQ ETF?

I think the below chart can be very helpful in looking at the situation.

We can see that the Betashares Nasdaq 100 ETF is close to its peak. But, it has reached a new high numerous times over the years and certainly can do so again.

It can be a mistake to think a good-performing investment that has hit a new high can't keep going higher, particularly if profit growth is helping justify a higher valuation.

If someone had said in December 2019 – at an all-time high – that it was too late to invest in this ETF, they'd have missed out on gains of more than 70% in the last four years.

However, there is no absolute guarantee that any investment will go up over any particular period of time.

It's quite possible that the market has gotten ahead of itself, particularly as interest rates remain high – and it could fall at some point in 2024.

However, I think the NDQ ETF can continue to perform well because of the quality of its underlying company holdings. With a five-year investment in mind, I'd be very happy to invest for the long term.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, 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. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended ASML, Adobe, Advanced Micro Devices, Airbnb, Alphabet, Amazon, Apple, BetaShares Nasdaq 100 ETF, Booking Holdings, Costco Wholesale, Intuitive Surgical, Meta Platforms, Microsoft, Nvidia, PayPal, and Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $420 calls on Adobe, short December 2023 $67.50 puts on PayPal, and short January 2024 $430 calls on Adobe. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended ASML, Adobe, Airbnb, Alphabet, Amazon, Apple, Booking Holdings, Meta Platforms, Nvidia, and PayPal. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ETFs

A man sees some good news on his phone and gives a little cheer.
ETFs

Why these fantastic ASX ETFs could be buys with $2,500

Let's dig deeper into these funds and see what they offer investors.

Read more »

Woman in a hammock relaxing, symbolising passive income.
ETFs

This ASX ETF might just be the only investment you'll ever need

It doesn't get more hands-off than this ETF.

Read more »

A man looks at a graph on his phone.
ETFs

How are these new ASX ETFs performing since inception?

These two new funds have had opposite results since first listing.

Read more »

A graphic illustration with the words NASDAQ atop a US city and currency
ETFs

Everything you need to know about the NDQ ETF

This ETF is very popular with Aussie investors. Let's find out why.

Read more »

ETF written with a blue digital background.
ETFs

2 ASX ETFs I'd buy for growth and to protect against stock market sell-offs

I think these ASX ETFs could provide the best of both worlds.

Read more »

an older couple look happy as they sit at a laptop computer in their home.
ETFs

Overinvested in the iShares S&P 500 ETF (IVV)? Here are two alternative ASX ETFs to buy

Here are some compelling options to diversify a portfolio focused on US shares.

Read more »

group of traders cheering at stock market
ETFs

Nvidia soars on game changing news: 3 ASX ETFs set to benefit

Nvidia shares have nearly doubled since their April low.

Read more »

A businessman hugs his computer and smiles.
ETFs

Top ASX ETFs to buy and hold for the next 10 years

Let's see what sets these funds apart from the rest and makes them great buy and hold options.

Read more »