Welcome to another in the series “Under the Hood,” where we take a deep dive into the world of Exchange Traded Funds (ETFs). Today, we’re diving deep into the Betashares Nasdaq 100 ETF (ASX: NDQ). This ETF is a product issued by Betashares, and it focuses on the top 100 companies listed on the Nasdaq, one of the two major exchanges in the USA.
The NDQ aims to track the performance of the NASDAQ-100 Index (before fees and expenses). This index comprises 100 of the largest non-financial companies listed on the NASDAQ market, including many companies that are at the forefront of the new economy. Interestingly, NASDAQ is both the index provider and the exchange for this ETF.
The management cost for NDQ is 0.48% p.a., which equates to $48 per $10,000 invested. It’s important to note that other costs, such as transaction costs, may apply.
The top holdings of NDQ include some of the biggest names in the tech industry. You might wonder why Microsoft is the biggest holding, even though Apple is a larger company. The answer lies in the structure of the NASDAQ-100 Index, which is based on market capitalization with certain rules to prevent concentration in a single stock.
So, how does NDQ fit into a portfolio? It offers a convenient way to invest in the Nasdaq 100 in a single trade, giving you access to companies at the forefront of the future like Apple, Amazon, and Google. It provides diversified exposure to a high growth potential sector that is under-represented in the Australian sharemarket. This makes NDQ a suitable choice for a core portfolio allocation to global companies with long-term growth potential.
In summary, NDQ offers a cost-effective way to gain exposure to the top 100 companies on the Nasdaq, with a strong focus on technology. It can serve as a long-term portfolio holding, providing potential portfolio diversification and convenient access to sectors under-represented on the Australian sharemarket.
For more information on NDQ, check out the Betashares website. And if you’re new to ETFs, you might find these Equity Mates episodes helpful: Active ETFs, ETFs for Beginners, and WTF is an ETF.