Here’s why the BetaShares Nasdaq 100 ETF could be a buy today

Is this US tech ETF a compelling buy today after the nasty share price falls we have seen this year?

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Key points

  • 2022 has been a rough year so far for many ASX shares
  • But tech shares, both in Australia and the US, have taken the brunt
  • In my view, this makes the BetaShares Nasdaq 100 ETF a smart buy today

As many investors would be aware, it’s been a particularly hard year for ASX tech shares. Since the start of the year, the S&P/ASX All Technology Index (ASX: XTX) has lost almost a third of its value.

But this tech slump isn’t just confined to the ASX boards. US tech shares have been especially hard hit too. We can see this in the performance of the BetaShares Nasdaq 100 ETF (ASX: NDQ).

NDQ is an ASX-listed exchange-traded fund (ETF) that tracks the NASDAQ-100 Index (INDEXNASDAQ: NDX). It is the only ASX-listed ETF to do so. The Nasdaq is one of the two US stock exchanges. It is best known for being the exchange of choice for most US tech companies.

You’ll find everything from Apple Inc, Tesla Inc, Microsoft Corporation and Inc to Meta Platforms Inc, Alphabet Inc, PayPal Holdings Inc, and Netflix Inc on the NASDAQ. And thus, in NDQ.

Even though some of the top holdings in the BetaShares Nasdaq 100 ETF are some of the most well-known and profitable companies on the planet, it hasn’t saved the ETF from some nasty share price falls this year. Since the start of 2022, NDQ units have lost more than 22% of their value.

These falls have come as many of the underlying tech shares that underpin this ETF have struggled this year. Take Amazon shares. Amazon has fallen more than 26% in 2022 so far. Tesla has lost 35% of its value year to date. And Meta (formerly Facebook) shares are down more than 41%.

So is the NDQ ETF a buy today?

Could these share price falls herald a buying opportunity for the Nasdaq 100 ETF?

In my opinion, yes.

Firstly, the Nasdaq 100 is an index. This means that the top-performing shares rise to the top over time, while the losses drop off the perch. This means NDQ, like any other index ETF, can be used as a passive investment.

Secondly, the Nasdaq is essentially a bet on the future of the US tech sector, given most tech companies call it home. The US tech sector has dominated the world for decades now, and there is little reason to think it isn’t set up to continue to do so. Companies like Apple, Amazon, Netflix, and Alphabet’s Google seem to only grow more entrenched in our lives every year and are still growing at healthy clips.

Thirdly, NDQ is an ETF that has some impressive runs on the board. Although its performance has been disappointing this year, consider this. NDQ has still averaged an impressive performance of 19.76% per annum over the past five years. Past performance is no guarantee of future gains. But it does give us an idea of the potential that is there.

So all in all, this recent pullback for the BetaShares Nasdaq 100 ETF could well be a compelling buying opportunity going forward.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, 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. Motley Fool contributor Sebastian Bowen has positions in Alphabet (A shares), Amazon, Apple, Meta Platforms, Inc., Microsoft, Netflix, PayPal and Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, BETANASDAQ ETF UNITS, Meta Platforms, Inc., Microsoft, Netflix, PayPal Holdings, and Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Meta Platforms, Inc., Netflix, and PayPal Holdings. 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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