The BetaShares Nasdaq 100 ETF (ASX: NDQ) used to be one of the best-performing exchange-traded funds (ETFs) on the ASX. NDQ is, at its heart, a tech-based ETF — but technically, it's an index fund.
This fund tracks the NASDAQ-100 Index (INDEXNASDAQ: NDX), which follows the largest 100 companies on the United States NASDAQ stock exchange.
The NASDAQ is one of the two major stock exchanges in the US. It is the one that most prominent tech companies call home in America, which gives it a heavy bias towards tech shares.
But 2022 has not been kind to this ETF. In fact, it's been the worst start to a year that NDQ has ever gone through. Year to date, NDQ units are now down 28% on the ASX. That's including the small gain that the fund managed today.
So what's behind this dramatic change in fortune?
Why has the NDQ ETF had such a tough 2022 on the ASX?
Well, the problems the BetaShares NASDAQ 100 ETF has faced this year largely stem from its largest holdings.
It was NDQ's exposure to tech giants like Apple Inc (NASDAQ: AAPL), Amazon.com Inc (NASDAQ: AMZN) and Microsoft Corporation (NASDAQ: MSFT) that helped it have such a strong few years before 2022.
But it is this same exposure that is dragging NDQ back to Earth this year.
The ETF's five-largest holdings are Apple, Amazon, Microsoft, Tesla Inc (NASDAQ: TSLA) and Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL). Together, these five tech giants make up more than 40% of NDQ's portfolio weighting as it currently stands.
What's happening with NDQ's top 5 holdings?
We all know how successful these companies have been over the past few years. But 2022 has seen investors get cold feet.
Apple shares are now down more than 25% year to date.
Amazon shares have lost 36.8% over the same period.
Microsoft has shed 24.8%.
Alphabet's Class A shares are down 24.3%, while Tesla has lost almost 42%.
So, this is why the BetaShares Nasdaq 100 ETF has been suffering so much pain over the year so far.
But consider this. Even though NDQ has been in the wars of late, this ETF has still (as of 31 May) managed to return an average of 18.15% per annum over the past five years, and 19.94% per annum over the past three.
