Buy this top ASX ETF now to make the most of northern summer

As a rule, global stock markets tend to perform worse from June to August, but this ASX ETF could buck that trend.

| More on:
A woman crosses her fingers as she flicks a coin into a fountain, hoping for good luck.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ETFs

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.

Record highs! Is it too late to buy the Nasdaq 100 (NDQ) ETF on the ASX?

AI mania is taking the tech-centric index to new heights. Should investors hold off on buying into the local Nasdaq…

Read more »

ETF written in blue with a man and woman sitting on their laptops.

5 ASX ETFs that could be great long term buys

Looking for buy and hold options? Then take a look at these five ETFs.

Read more »

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

A middle-aged couple dance in the street to celebrate their ASX share gains

Why Vanguard US Total Market Shares Index ETF (VTS) is a top buy for retirement

Cash flow and capital growth are two reasons why I think this ASX ETF could be a really good pick…

Read more »

Diverse group of university students smiling and using laptops

Own the ASX's Vanguard US Total Markets ETF (VTS)? Here's what you're invested in

This ETF is worth a deeper dive...

Read more »

ETF with different images around it on top of a tablet.

Buy and hold these ASX ETFs for 10 years

Here's why these ETFs could help you generate wealth over the long term.

Read more »

ETF in written in different colours with different colour arrows pointing to it.

4 ASX ETFs with yields over 5%

Here are four funds offering pleasing levels of income.

Read more »

An excited man stretches his arms out above his head as he reaches a mountain peak representing two ASX 200 shares reaching multi-year high prices today

Should you buy Betashares Nasdaq 100 ETF (NDQ) at an all-time high?

Can an investment at an all-time high be a good idea?

Read more »