As most investors would know, 2022 has been a tough year for most of us. The S&P/ASX 200 Index (ASX: XJO) has lost close to 10% year to date (it was significantly more before this bright October). And many ASX 200 shares have fared even worse. But spare a thought for the BetaShares NASDAQ 100 ETF (ASX: NDQ).
Before 2022, this NASDAQ 100 ETF was one of the most successful exchange-traded funds (ETFs) on the ASX. It had enjoyed several years of double-digit returns and even rode out the COVID-battered 2020 with a gain of around 30%.
But in 2020 thus far, this ETF has been brought back to earth, and comprehensively so. BetaShares NASDAQ 100 units were trading at $36.58 at the start of the year. Today, this ETF has closed at $27.21 per unit. That represents a year-to-date loss of 25.6% or so.
So what's going on here? Why has this stellar performer suddenly curdled for investors?
Why has the BetaShares NASDAQ 100 ETF lost a quarter of its value in 2022?
Well, an ETF, and its performance, is only as strong as its underlying holdings. In the BetaShares NASDAQ ETF's case, these underlying holdings are the 100 companies that make up the NASDAQ 100 Index. The NASDAQ is one of the two major stock exchanges over in the US. It has made a name for itself as the 'tech-heavy' exchange, where most of the country's biggest tech names call home.
That's why companies like Apple, Amazon.com, Alphabet, Tesla and Microsoft are major constituents of the NASDAQ-100 Index (NASDAQ: NDX), and by extension, the NASDAQ 100 ETF.
The NASDAQ ETF also houses other big tech companies like Adobe, NVIDIA, Netflix and Meta (formerly known as Facebook).
As such, any performance analysis of the NASDAQ 100 ETF has to start with these kinds of companies. And by looking at these kinds of tech shares' performances, we can immediately see why the NASDAQ 100 ETF is struggling this year.
Apple shares have lost almost 18% of their value in 2022 thus far. Microsoft is sitting at a 31% loss, while Amazon has lost 32%. Tesla is down a nasty 43.8%, while Alphabet has given up 34.5% of its value.
Now, on the provider's latest data, Apple made up a whopping 13.8% of the Betashares NASDAQ 100 ETF's underlying portfolio. Microsoft accounted for another 9.9%, and Amazon, Alphabet and Tesla, 6.8%, 6,7% and 4% respectively on top of that.
So there was no way this ETF was going to have a good year when its underlying holdings were shedding those kinds of numbers.
That's why it has been such a dire year for the BetaShares NASDAQ 100 ETF. These are the companies that drove this fund to its spectacular returns in recent years. But they are proving a double-edged sword in 2022.
