Is BetaShares NASDAQ 100 ETF (ASX:NDQ) a good investment?

BetaShares NASDAQ ETF (ASX: NDQ) is an exchange-traded fund (ETF) that tracks the 100 largest non-financial companies listed on the US NASDAQ. The question is, is NDQ a good investment?

If an investor is looking at ETFs as potential investments, an important question to ask is “what characteristics does a good ETF have?“.

There are multiple factors to consider and in particular there are three factors I look at first when assessing an ETF. I believe that NDQ has a balance in all three of these areas.

Diversification and underlying holdings

One of the biggest draw cards for ETFs is the instant diversification in one low cost investment. Each ETF targets a different area with its underlying holdings and usually tracks a different index, it’s important to know what the investment is made up by.

NDQ ETF tracks the NASDAQ-100 Index. This index is the 100 largest non-financial companies listed on the NASDAQ market in the US. It is heavily weighted towards technology stocks with 49.4% of this ETF being made up by the technology sector.

This ETF is made up by some of the largest global household names with Apple (11.3%), Microsoft (10.1%), Alphabet (8.1%), Amazon (7.8%) and Facebook (4%) being its five biggest holdings.

Low fees

Low fees are are an top priority when considering any investment. Fees and costs associated with investing make a costly impact on the potential returns if the fees are high. Compounding is an investor’s friend for returns, but an enemy if its compounded fees.

NDQ ETF has an annual management fee of 0.48%. This means that if $5,000 was invested for one year the fee would be $24. This is not as cheap as some other ETFs like the very low fee of 0.03% from Vanguard U.S Total Market Shares Index ETF (ASX: VTS).

However the NDQ fee is still reasonably low, most fund managers charge at least 1% in annual fees.

Returns

Returns are the whole point, right? While it is not possible to accurately predict future returns, we can look at past returns to get an idea on how it has performed in recent times.

This index has had some impressive returns in the past five years with an average of 27.89%. When looking at the past year it has returned 30.37%.

It’s important to keep in mind that this does not represent future returns, however these were some tasty returns for investors who got to experience them.

In terms of the dividend yield, BetaShares says it has/had a 3.5% yield. This is higher than one might have expected and is probably down to the fact that it has to rebalance the holdings regularly and distribute the capital gains to ETF holders.

So is NDQ a good investment?

I think that it is a solid choice for investors looking for US exposure, particularly in the technology sector.

It provides exposure to quality businesses with quality earnings, impressive historic returns and reasonable fees.

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From 200+ ETFs in Australia, our top investment analyst has just identified his #1 ETF for 2021 and beyond.

Low fees? Check.

Long-term growth potential? Check.

Regular cash returns? Check!

This ETF makes investing in ETFs "Super-Easy".

Simply click here to access the full ETF report, ticker code, and step-by-step investment guide. Our expert's #1 ETF report is completely free.

No gimmicks, no payment, no credit card info. Just click the link below and enter your email address. We'll send you the report right away.

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At the time of publishing, Jaz does not have a financial or commercial interest in any of the companies mentioned.

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The information on this website is general financial advice only. That means, the advice does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. Please read our Terms & Conditions and Financial Services Guide before using this website.

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