The Betashares Nasdaq 100 ETF (ASX: NDQ) has been one of the best-performing ASX-listed exchange-traded funds (ETFs) over the past five years.
According to BetaShares, the NDQ ETF delivered average annual returns per annum of 20.6% over the past five years. Of course, past performance is not a guarantee of future returns.
I wouldn't buy something just because its price has gone up, but this rise has come about from the strong underlying performance of the businesses within the fund.
As the US election approaches, it has been hard to avoid some of the coverage. I'm not about to discuss my views on each presidential candidate, but I will outline my thoughts on why we can still invest in the NDQ ETF, whether Kamala Harris or Donald Trump wins.
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Long-term returns
In my view, neither candidate would want the United States-based companies within the NDQ ETF's portfolio to perform badly.
Success for names like Apple, Alphabet, and Microsoft is generally good for the US, with lots of highly paid jobs, large taxable profits, investment returns for investors, and a globally leading position in the technology scene.
According to BetaShares, the NDQ ETF has returned an average return per annum of 19.4% since its inception in May 2015. Those returns have been generated through the terms of different presidents from different political parties, including Barack Obama, Donald Trump and Joe Biden.
Historically, it hasn't mattered too much who has been in charge of the country. So, while each side may argue that the US is headed for disaster if the other wins, hopefully, that's not the case.
The NDQ portfolio's companies are global businesses that do not fully rely on the US economy or political situation for success. The holdings within the NDQ ETF portfolio feature products and services, brand power, and strong financial returns.
So, the more relevant question may be: Assuming the US election doesn't change the country's long-term trajectory, is the NDQ ETF a good buy today?
In my opinion, many of the businesses in the Betashares Nasdaq 100 ETF still have plenty of growth potential as they release updated or new products for household and business customers.
Interest rates
The US Federal Reserve is reportedly close to cutting the interest rate by 25 basis points (0.25%) or perhaps even 50 basis points (0.50%). I believe the Fed will start slowly.
While investors are already expecting a cut, the longer-term effect could indirectly help the NDQ ETF portfolio if it reduces debt costs or helps customers.
I think interest rate cuts can be a longer-term catalyst for returns, particularly if rates are reduced by more than 50 basis points in the medium term, though the US Federal Reserve will be wary of reaccelerating inflation.
Aside from the uncertainty of the US election, I think now is still a good time to invest for the long-term in the NDQ ETF.
