I think this ASX growth stock has market-beating potential

I'm betting that this investment will crush the ASX over the next few years.

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Why else would an investor buy an ASX growth stock if not for market-beating potential? After all, it's all in the name. Since most growth stocks either pay insignificant dividends or none at all, the returns you get from them typically come in the form of share price growth – hence the name.

I don't own too many ASX shares you could classify as 'growth stocks' in my own ASX portfolio. But I do own one that I think has the potential to beat the S&P/ASX 200 Index (ASX: XJO) handily over the next few years and even decades.

It's the BetaShares Nasdaq 100 ETF (ASX: NDQ). Now this investment isn't technically an ASX share. Rather it is an exchange-traded fund (ETF) and index fund that holds 100 of the largest shares on the Nasdaq stock exchange.

Why do I think this ASX growth stock will beat the ASX 200?

The Nasdaq is one of the two major stock exchanges in the United States, the other being the New York Stock Exchange. It is known for being the 'cooler' of the two, housing almost all of the major US tech stocks.

Its top holdings are the 'magnificent seven' stocks we've all become increasingly familiar with over the past decade – the likes of Apple, Microsoft, Amazon, Alphabet, NVIDIA, Meta Platforms and Tesla.

But NDQ also houses many other famous growth stocks, including PayPal, Netflix, Adobe, Costco, Booking Holdings, Starbucks and Airbnb.

These names are obviously some of the highest-quality and most dominant companies (and growth stocks) in the world.

But this ETF that holds them has a long track record of delivering performances that shred those that the ASX has delivered.

Over the past five years (as of 29 February), NDQ units have returned an average of 22.98% per annum (including dividends). The index that this fund tracks has averaged a return of 21.82% per annum over the past ten years.

In contrast, an ASX 200 index fund in the iShares Core S&P/ASX 200 ETF (ASX: IOZ) has returned an average of 8.52% per annum over the past five years, and 7.79% over the past ten.

Now past performances are never a guarantee of future returns. But given the innovative and disruptive nature of the world-class growth stocks in the Nasdaq 100 ETF compared to the ASX, I'd be willing to bet that this outperformance continues well into the future.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Adobe, Airbnb, Alphabet, Amazon, Apple, Betashares Nasdaq 100 ETF - Currency Hedged, Costco Wholesale, Meta Platforms, Microsoft, Starbucks, and Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Adobe, Airbnb, Alphabet, Amazon, Apple, BetaShares Nasdaq 100 ETF, Booking Holdings, Costco Wholesale, Meta Platforms, Microsoft, Netflix, Nvidia, PayPal, Starbucks, and Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short March 2024 $67.50 calls on PayPal. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Adobe, Airbnb, Alphabet, Amazon, Apple, Betashares Nasdaq 100 ETF - Currency Hedged, Booking Holdings, Meta Platforms, Netflix, Nvidia, PayPal, and Starbucks. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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