The Betashares Nasdaq 100 ETF (ASX: NDQ) is one of the leading exchange-traded funds (ETFs) on the ASX, in my eyes.
Just look at the chart below. It has been an impressive rise over the long term, aside from the occasional bump in the road.
The main thing to keep in mind about ETF returns is that they're largely dictated by the performance of the underlying holdings.
If the collective group of businesses performs well, then that should translate to the ETF seeing capital growth, too. Any dividends received by an ETF should be passed onto investors as a distribution.
Let's look at what businesses are actually inside the NDQ ETF.
NDQ ETF portfolio
The Betashares Nasdaq 100 ETF includes 100 businesses that are all listed on the NASDAQ exchange. It has an annual management fee of 0.48%.
This ETF is invested in many of the world's largest, most impressive businesses.
I'm not going to list all 100 holdings, but I will mention each holding with a weighting of at least 2% as of 1 October, starting with the biggest position:
- Apple (8.9%)
- Microsoft (8.1%)
- Nvidia (7.4%)
- Broadcom (5.2%)
- Meta Platforms (5.2%)
- Amazon.com (5%)
- Alphabet (4.9%)
- Tesla (3.2%)
- Costco (2.6%)
- Netflix (2%)
Looking at the sector breakdown, over half of the NDQ ETF portfolio (50.8%) is invested in IT businesses, with Amazon, Alphabet and Meta Platforms not counting as IT businesses.
The other sector allocations at 30 August 2024 were as follows: communication services (15.7%), consumer discretionary (12.3%), healthcare (6.4%), consumer staples (6.3%), industrials (4.7%), materials (1.6%), utilities (1.3%), financials (0.5%) and energy (0.5%).
Many of the businesses within the portfolio are among the global leaders in what they do.
For example, Nvidia, Microsoft, and Alphabet offer attractive exposure to artificial intelligence. Alphabet and Apple are leading smartphone businesses. Microsoft and Amazon are two of the largest cloud computing businesses in the world. Alphabet and Microsoft are leaders in office and education tools. Tesla and Alphabet are leaders in automated driving. Netflix and Alphabet are global leaders in online video.
Many of these businesses are at the forefront of global technological innovation, which benefits households and businesses alike. This helps drive their revenue, profit, and, ultimately, shareholder returns.
Investment returns
Past performance is certainly not a guarantee of future returns. But, I do believe these high-quality businesses can continue to perform for a long time to come.
According to BetaShares, the NDQ ETF has returned an average of 19.4% since its inception in May 2015. Time will tell how strong the future returns are, but the profit growth prospects look compelling.
