The ASX boards are home to many an exchange-traded fund (ETF). Many of these are index fund ETFs, some are not. But the BetaShares NASDAQ 100 ETF (ASX: NDQ) arguably makes a case to be one of the best, if not the best, index funds on the ASX.
There are a few minor reasons — and one major reason — we can make this assessment.
So the BetaShares NASDAQ 100 ETF covers the NASDAQ-100 (INDEXNASDAQ: NDX). This index tracks the largest 100 companies on the US NASDAQ stock exchange by market capitalisation.
Rather unusually, the US has not one, but two major stock exchanges. The NASDAQ is famous for housing many of the 'newer', tech-heavy companies on the US markets, and holds almost all the major US tech companies that we all know. Apple, Microsoft, Netflix, Amazon, Alphabet, Tesla, Meta Platforms, PayPal, and Adobe shares can all be found on the NASDAQ exchange.
This inherently gives investors a simple investment that gives broad exposure to some of the best and most dominant tech shares in the world – the types of shares that are simply unavailable on the ASX.
Many of the NASDAQ's top holdings are also globally dominant. Think of how many countries the likes of Apple, Alphabet, and Netflix serve. So the Betashares NASDAQ ETF is certainly more than just a US-focused fund.
How does the BetaShares NASDAQ 100 ETF measure up?
But let's talk about performance – this ETF's most compelling claim in its candidacy for 'the ASX's best index fund'.
The BetaShares NASDAQ 100 ETF has taken a substantial hit in recent months. The ETF's units are still down by almost 24.5% year to date.
However, despite this, the BetaShares NASDAQ ETF has still averaged a return of 16.44% per annum over the past three years, as of 31 August. Over the past five years, it has averaged 19.21% per annum.
That runs rings around the vast majority of other ASX index funds on the ASX. The popular Vanguard Australian Shares Index ETF (ASX: VAS) has managed an average of just 8.12% per annum over the past five years.
The iShares S&P 500 ETF (ASX: IVV) has averaged a close-but-no-cigar 17.62% per annum over the same period. While the Vanguard MSCI International Shares Index ETF (ASX: VGS) is further away with its five-year average of 11.95% per annum.
So the BetaShares NASDAQ 100 ETF's performance dominates all of these other popular index funds. As such, together with its broad exposure to globally-dominant tech companies, this ETF makes a fine case for being the best index fund on the ASX.
