Betashares Nasdaq 100 ETF (ASX: NDQ) could be one of the best exchange-traded funds (ETFs) to have in a portfolio for long-term growth.
Why is NDQ ETF such a good investment?
There are plenty of different quality ETFs that Aussies can buy like iShares S&P 500 ETF (ASX: IVV) and VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT) – they are good long term options. But, NDQ ETF gives some very good benefits as well:
Access to big US tech stocks
NDQ ETF is invested in 100 non-financial NASDAQ-listed businesses, with the big US tech stocks having the largest weightings.
As a group, they are among the most dominant and strong companies in the world.
At 26 March 2021, the position sizes of these huge companies were: Apple (11%), Microsoft (9.6%), Amazon (8.3%), Alphabet (6.9%) and Facebook (3.7%).
Other tech shares also get a noticeable weighting like Tesla, PayPal, Intel, Adobe and Netflix.
Returns
Ultimately, what we’re looking for is returns – and this ETF has certainly delivered. The last five years have been very fruitful for the large US tech shares with an average net return of 23.7% per year.
Past performance is certainly not guarantee of future performance, but I believe that the NDQ ETF can continue to produce solid returns considering it’s many of these businesses that continue to create new products and services for the world.
The fact that the Australian dollar is so strong right now means it’s cheaper to buy more of overseas shares.
There may be new strong businesses in the future that aren’t one of the current big US tech group, but there’s a good chance it would be listed on the NASDAQ.
Diversification
Many Aussies have a good amount allocated to ASX shares. But by doing that, you miss out on technology – because the ASX doesn’t have much tech in it – and international earnings.
Whilst all of the holdings are listed in the US, many of them actually have global earnings. Microsoft, Alphabet and Facebook operate in almost every country in the world.
I think NDQ ETF would be a good way to get earnings diversification and exposure to businesses outside of the ASX.
