The Nasdaq 100 Index explainer:
NDQ vs QQQ

The Nasdaq 100 and how it works

Technology, consumer services, and other growth stocks dominate the Nasdaq 100, which comprises companies across a number of high-growth potential sectors that are under-represented in the Australian sharemarket.

Summary

  • The Nasdaq 100 Index includes 100 of the world’s largest non-financial companies listed on the broader Nasdaq sharemarket
  • As a collection of dynamic companies at the forefront of innovation, the Nasdaq 100 Index has come to represent the ‘new economy’
  • Both Betashares NDQ and HNDQ offer investors a significant technology sector allocation, and provide exposure to household names such as Apple, Microsoft, Google, Amazon, Netflix and more
  • NDQ and HNDQ offer exposure to one of the world’s most actively traded indices

What is the Nasdaq 100 Index?

The Nasdaq 100 is an index which includes 100 of the world’s largest non-financial companies listed on the broader Nasdaq sharemarket, based on their market capitalisation.

More than half the companies in the Nasdaq 100 Index are in the technology sector, however the Nasdaq 100 also includes companies from a variety of other sectors, including retail, consumer goods and services, industrial, healthcare and more.

Unique to the Nasdaq 100 Index is the diverse mix of companies which offer innovation and future growth potential. As can be seen in the table below, with earnings growth substantially higher than that of Australian and global sharemarkets, the Nasdaq 100 Index has significantly outperformed over the past decade.

Performance and Earnings Growth as at 31 December 2022

Nasdaq 100 Index Australian Shares Index Global Shares Index
1 year -28.0% -1.1% -12.2%
3 year (p.a.) 9.5% 5.5% 6.2%
5 year (p.a.) 15.1% 7.1% 9.2%
10 year (p.a.) 21.0% 8.7% 13.6%
10 year earning growth (p.a.) 16.0% 7.4% 10.9%

*Source: Bloomberg. Shows performance of Nasdaq 100 Index, which NDQ aims to track, and does not take into account NDQ’s management costs of 0.48% p.a. or other fund costs. Australian Shares Index refers to S&P/ASX 200 Index. Global Shares Index refers to MSCI WORLD NTR (AUD). NDQ’s inception date was 26 May 2015. Past performance is not indicative of future performance of index or ETF. Investing involves risk. The NASDAQ 100 Index’s returns can be expected to be more volatile (i.e. vary up and down) than a broad Australian or global shares exposure.

History of the Nasdaq 100 Index

The broader Nasdaq sharemarket was founded in 1971 without a physical trading floor, as the first sharemarket in the United States to enable online trading.

The Nasdaq 100 Index (or NDX) was launched in February 1985. Since then, it has evolved into a leading barometer of growth companies at the forefront of innovation.

Companies included in the Nasdaq 100 Index have helped drive the modern economy and the evolution of the Index, and, in many ways, the Index reflects how the business world has shifted in the 21st century.

What is the Nasdaq 100 ETF?

The Betashares NASDAQ 100 ETF (ASX: NDQ) aims to track the performance of the Nasdaq 100 Index (before fees and expenses).

Three reasons to own the Betashares NDQ ETF

1. Invest in the way you live

The Betashares Nasdaq 100 ETF (ASX Code: NDQ) provides access to companies that provide services that are now part of our everyday lives. NDQ provides exposure to many of the world’s most revolutionary companies, including Google, Apple, Amazon, Netflix, Tesla and Zoom.

2. Exposure to the new economy

With its strong focus on technology, NDQ provides diversified exposure to a high-growth potential sector that is under-represented in the Australian sharemarket.

3. Simple, cost effective international diversification

In a single ASX trade, add 100 leading global companies to your investment portfolio. With management costs of only 0.48% p.a. (or $48 for every $10,000 invested)2  NDQ is a cost-effective investment solution for those seeking international shares exposure.

How to use the Betashares NDQ ETF & HNDQ ETF in your portfolio

  • A core portfolio holding for U.S. growth equities providing transparency and diversification benefits
  • Tactical exposure to the global technology sector
  • A cost-effective complement and/or alternative to investments with active fund managers focusing on the U.S. equity market
  • HNDQ may suit investors who want to invest in leading U.S. technology companies in a way that seeks to minimise the impact of currency fluctuations on their investment returns.

 

Note: The main aim of currency hedging is not so much to take a position that the Australian Dollar will strengthen (although investors who are of this view can use currency-hedged investments to express that view), but rather to achieve a ‘purer’ exposure to the performance of the companies in the portfolio, minimising the influence of exchange rate movements, and substantially reducing a source of uncertainty.

How to buy the Betashares NDQ ETF

You can buy and sell units in both the NDQ Nasdaq 100 ETF and the HNDQ Nasdaq 100 ETF – Currency Hedged  just like any share on the ASX.

Learn how to invest in ETFs in a step-by-step guide here.

Past performance is not indicative of future performance. 

Other costs, such as transaction costs, may apply. Please refer to the Product Disclosure Statement for more information.

There are risks associated with an investment in NDQ or HNDQ, including market risk, country risk, currency risk (for NDQ), currency hedging risk (for HNDQ) and sector risk. NDQ’s and HNDQ’s returns can be expected to be more volatile (i.e. vary up and down) than a broad global shares exposure, given their concentrated sector exposure. NDQ and HNDQ should only be considered as a component of a diversified portfolio. For more information on risks and other features of NDQ and HNDQ, please see the relevant Product Disclosure Statement.
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Written by

Holly Morgan

Content Manager