While stock markets the world over tend to underperform in northern summer, this ASX ETF (exchange-traded fund) has historically outshined.
The ETF in question is the BetaShares NASDAQ 100 ETF (ASX: NDQ), which aims to track the performance of the NASDAQ 100.
A little over two weeks into June, NDQ hasn't shot the lights out yet. But then the ASX ETF is already up 38% so far in 2023.
Now, here's why NDQ often outperforms other index-tracking ETFs as the southern hemisphere drops into winter and our northern neighbours enjoy some warm days.
Why this ASX ETF looks brighter from June to August
You've likely heard the old investor adage, "Sell in May and go away."
Now I don't recommend taking that advice literally. You can find some great investment opportunities year-round, including, in my opinion, this particular ASX ETF. But as a rule, global stock markets do tend to perform worse from June to August.
With that in mind, the online trading platform e-Toro looked at 45 years of data from major exchanges across the world to uncover which markets were more likely to perform better during the northern summer.
Based on that data, e-Toro reported that the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) led the charge among global indexes. The NASDAQ delivered average monthly gains of 0.77% during the June-August period over almost half a century.
Now NDQ only tracks the NASDAQ-100 Index (NASDAQ: NDX) — the largest 100 NASDAQ companies — not the entire composite index. And the ASX ETF has only been around since 2015, not 45 years. But since its inception, NDQ has gained an impressive 233%, and often (though not always) has managed to outperform during northern summer.
Commenting on why we often see poorer performance on global markets during northern summer, eToro markets analyst Josh Gilbert said:
The peak summer months [in Europe] are typically some of the weakest of the year for global equity markets. This is led by France and Italy, with local investors more likely to be enjoying days on the beach.
Gilbert noted that the ASX and the Hong Kong market "hold their own more than other global markets" during this time.
But investors may want to consider some exposure to an ASX ETF like NDQ that aims to track the NASDAQ's performance.
"Between June and August since 2012, the NASDAQ returned an average of 8.5%, whilst the ASX 200 has returned an average of 2.5%," Gilbert said.
