I think it's worth considering whether BetaShares NASDAQ 100 ETF (ASX: NDQ) is a buy.
Since the start of October the value of BetaShares NASDAQ 100 ETF has fallen 12%. That means you could say it's 12% better value.
What is this ETF?
Firstly, for readers that don't know, it's an exchange-traded fund (ETF) that gives investors exposure to 100 of the leading technology businesses that are listed in the US on the NASDAQ.
I'm sure you know many of the top names which include Apple, Microsoft, Amazon, Alphabet (Google), Facebook, Intel and Cisco.
Why should you be interested in this ETF?
I believe Australian investors should be particularly interested in this ETF due to the limited (well-priced) technology options on the ASX.
Investing in 'blue chips' is a good thing only if the blood chips are actually good investments.
Most of the names I mentioned above are truly global businesses with a worldwide earnings base. They are the ones growing revenue and earnings at a good rate. Most of them have very sound financial balance sheets too. Indeed, Apple and Alphabet have more cash than the market caps of most businesses in the world.
Just consider Alphabet alone – its core business of advertising is generating 20% growth each year. Then add in its 'Google Data Centers' and automated car business Waymo – it has multiple growth drivers.
Apple's ecosystem, Microsoft's cloud computing service, Amazon's additional services and Facebook's VR segment could all be larger earners over time.
What have the returns been?
Over the past three years the fund has returned an average of 16.47% per annum after fees. Its management fees are currently 0.48% per annum. This is quite reasonable for a focused ETF.
Is it a buy?
Some investors think that the NASDAQ is overvalued and rising interest & bond rates may reduce the value in sometime during the next year or so. However, when you think about the future in five years or more their prospects looks rosy for many of the top constituents.
I'd be happy to buy shares at today's price for the long-term, but it may drop in the shorter-term due to trade wars and interest rates.
