The Betashares Nasdaq 100 ETF (ASX: NDQ) is one of the leading ASX exchange-traded funds (ETFs) to own, in my opinion.
It's invested in 100 of the largest businesses on the Nasdaq, a stock exchange in the US where many of the largest American tech businesses are listed.
Let's look at some very good reasons to like this fund.
Very strong businesses
When we look at the top holdings within the NDQ ETF, it owns many of the world's best and strongest businesses for what they do. I'm talking about names like Microsoft, Apple, Nvidia, Alphabet, Amazon.com, Broadcom, Meta Platforms, Costco, Tesla and Netflix.
Collectively, these companies have a strong position in their respective markets, and they continue to reinvest in their businesses. This can unlock the next device, service, or expansion into a new country and create stronger shareholder returns.
The businesses generally have strong returns on equity (ROE) and great balance sheets, so they're in a really good position to continue their success.
Underlying global diversification
The businesses are all listed in the US, which may initially seem quite undiversified geographically. However, I think the most important thing is that the portfolio generates profit from across the world; it's not necessarily about where they are listed.
I think the NDQ ETF offers good underlying diversification.
Apple's iPhones are used in almost every country in the world. Microsoft software is used by computers around the world. Google and Facebook are internet powerhouses used by billions of people. Netflix is gaining global subscribers. And so on.
The size of these businesses' underlying profits is very impressive, and the diversification of the earnings is stronger than it seems from the outside.
Excellent long-term returns for the NDQ ETF
Making returns is what it's all about. The NDQ ETF has been one of the best-performing ASX ETFs over the last few years. Since inception in May 2015, the Betashares Nasdaq 100 ETF has generated an average return per annum of 19.2%.
Of course, past performance is not a guarantee of future performance. Volatility occurs sometimes, and one or two of these businesses could suffer if their growth goes off track.
But, the NDQ ETF is invested in 100 leading businesses which, as a group, could keep doing well for a long time if they keep re-investing in their operations as much as they have done historically.
I'm not expecting the next decade to be as good as the last decade, but I believe the NDQ ETF can outperform the S&P/ASX 200 Index (ASX: XJO) because of its focus on global profit growth, good margins, and profit re-investment.
