Considering the Betashares Nasdaq 100 ETF (NDQ)? Here's what you're buying

The NDQ ETF has delivered strong results with an impressive portfolio.

| More on:
Man smiling at a laptop because of a rising share price.

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) 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.

Created with Highcharts 11.4.3BetaShares Nasdaq 100 ETF PriceZoom1M3M6MYTD1Y5Y10YALL29 May 20152 Oct 2024Zoom ▾2016201720182019202020212022202320242016201620182018202020202022202220242024www.fool.com.au

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.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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. 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 Alphabet, Amazon, Apple, BetaShares Nasdaq 100 ETF, Costco Wholesale, Meta Platforms, Microsoft, Netflix, Nvidia, and Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Broadcom and has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Netflix, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ETFs

Man pointing an upward line on a bar graph symbolising a rising share price.
ETFs

3 ASX ETFs for growth investors in FY 2026

Let's see what makes these funds top picks for growth investors.

Read more »

A couple sit in front of a laptop reading ASX shares news articles and learning about ASX 200 bargain buys
Share Market News

Are blue-chip stocks or ASX ETFs a better investment?

Lets compare these two investment options based on long term returns. 

Read more »

Beautiful young couple enjoying in shopping, symbolising passive income.
ETFs

The best ASX ETFs to buy and hold for 20 years

It could pay to hold onto these funds for the long term. Let's find out why.

Read more »

a man leans back in his chair with his arms supporting his head as he smiles a satisfied smile while sitting at his desk with his laptop computer open in front of him.
ETFs

3 ASX ETFs for beginners (and experts) to buy and forget

Let's see why these funds could be great additions to a portfolio.

Read more »

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 »