With the BetaShares NASDAQ 100 ETF (ASX: NDQ) share price down by 16% over the past three months, is it worth buying?
I think it’s definitely worth considering an investment.
This ETF gives us exposure to the 100 largest technology businesses that are listed on the NASDAQ in the US. Its largest holdings include Amazon, Microsoft, Apple, Alphabet, Apple, Netflix and Facebook.
All of these tech shares have been pummelled in recent months thanks to investor worries surrounding rising interest rates and the trade war with China.
Today’s announcement by Apple of reduced revenue expectations sent it share price down by 8% in after hours trade, which should further improve the price of the index for potential investors. But, the weakening Australian dollar compared to the US dollar has helped Aussie NASDAQ 100 shareholders.
Despite all of the talk of a crash, the BetaShares NASDAQ 100 ETF is still higher than it was a year ago. So it’s not all bad.
In the long-term I expect this index to grow significantly. Firstly, many of the big companies are trading on cheap forward earnings valuations, particularly when you consider their huge cash balances.
Their core operations continue to grow strongly, like Netflix’s subscriber numbers and the Google (& Youtube) advertising revenue. The pleasing organic growth is reason enough to consider a long-term investment.
But, it’s the future core products that particularly excite me. I don’t think the value of automated car business, Waymo, isn’t reflected in the Alphabet share price. The value of a not-yet-monetised Whatsapp probably isn’t reflected in the Facebook share price, and Oculus VR has huge long-term potential for the social media company.
Most of the FAANG shares have excellent potential when it comes to cloud computing, AI and their growing platform potential.
According to BetaShares this ETF is trading with a price/earnings ratio of under 20, which seems quite reasonable to me for the quality and growth of the underlying businesses.
There’s no guarantee we’ll see a turnaround over the next six months, but it looks like it good be a quality long-term investment for five years or longer.
Want some more exciting growth shares with some income thrown in? Try these quality ASX stocks.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.