Here’s why I prefer NDQ to these other ASX tech ETFs today

a man sits in casual clothes in front of a computer amid graphic images of data superimposed on the image, as though he is engaged in IT or hacking activities.

a man sits in casual clothes in front of a computer amid graphic images of data superimposed on the image, as though he is engaged in IT or hacking activities.

The BetaShares NASDAQ 100 ETF (ASX: NDQ) is a popular exchange traded fund (ETF) on the ASX. However, it is not the most popular ETF covering international shares on the ASX.

That honour goes to the iShares S&P 500 ETF (ASX: IVV), closely followed by the Vanguard MSCI Index International Shares ETF (ASX: VGS).

But the NASDAQ 100 ETF is still an index fund. It covers the 100 shares on the US’s NASDAQ-100 (INDEXNASDAQ: NDX). The NASDAQ is well-renowned for hosting some of the largest tech shares on the US market.

While ‘old school’ companies like Berkshire Hathaway, Coca Cola, and Bank of America list on the New York Stock Exchange, the NASDAQ hosts the likes of Apple, Microsoft, Alphabet, Amazon.com, and Tesla.

It also hosts a diverse range of other shares as well, of course. These include Palo Alto, Netflix, Costco, Adobe, Starbucks, and Airbnb.

Now, there are many, many ETFs on the ASX that cover corners of the global tech share space. Take the BetaShares Global Cybersecurity ETF (ASX: HACK). It (as you can probably guess) tracks a portfolio of cybersecurity companies.

The ETFS FAANG+ ETF (ASX: FANG) holds only 10 shares, including Apple, Alphabet, Microsoft, Meta Platforms, and Tesla.

Then there is the BetaShares Cloud Computing ETF (ASX: CLDD). It focuses on companies in the cloud computing industry, including Netflix and Salesforce.

The ETFS Morningstar Global Technology ETF (ASX: TECH) holds a diversified basket of 39 shares sourced from various corners of the global tech space.

But I prefer the BetaSahres NASDAQ 100 ETF to all of these other ASX tech ETFs.

This is for two reasons.

Why I prefer NDQ to any other ASX tech ETF

The first is sheer performance. Despite losing more than 12% over the six months to 31 July 2022, the NDQ ETF has still managed to give investors an average annual return of 20.69% over the past five years.

That runs rings around all of the other tech ETFs listed above, with the possible exception of FANG.

The FANG ETF has only been around for just over a year. But its benchmark index has reportedly returned an average of 24.6% per annum over the same period.

The second is diversification. NDQ has approximately 100 underlying holdings, far more than any of the above ETFs.

Among these 100 stocks are cybersecurity shares like Palo Alto, almost all of the shares in the FANG ETF, and cloud computing shares like Netflix.

A sector-specific ETF like HACK has its own diversification risks, seeing as all of the holdings come from the same sector.

But NDQ’s diversification risk is far lower seeing as it represents so many different underlying industries.

This diversification, together with NDQ’s superlative performance figures, is enough to convince me that I would rather have the NDQ ETF in my portfolio over any other tech-based ETF today.

The post Here’s why I prefer NDQ to these other ASX tech ETFs today appeared first on The Motley Fool Australia.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, 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. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Sebastian Bowen has positions in Adobe Inc., Airbnb, Inc., Alphabet (A shares), Amazon, Apple, Coca-Cola, Costco Wholesale, Microsoft, Netflix, Starbucks, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adobe Inc., Airbnb, Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, BETA CYBER ETF UNITS, BETANASDAQ ETF UNITS, Berkshire Hathaway (B shares), Costco Wholesale, ETFS Morningstar Global Technology ETF, Microsoft, Netflix, Starbucks, Tesla, and Vanguard MSCI Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long January 2024 $420 calls on Adobe Inc., long January 2024 $47.50 calls on Coca-Cola, long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), short January 2024 $430 calls on Adobe Inc., short March 2023 $130 calls on Apple, and short October 2022 $85 calls on Starbucks. The Motley Fool Australia has positions in and has recommended BETA CYBER ETF UNITS and BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended Adobe Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Berkshire Hathaway (B shares), Netflix, Starbucks, Vanguard MSCI Index International Shares ETF, and iShares Trust – iShares Core S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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