The BetaShares NASDAQ 100 ETF (ASX: NDQ) has been one of the most exciting exchange-traded funds (ETFs) to own over the last few years. The last few months have thrown up a lot of volatility for the US stock market, so this is a good time to consider whether the ASX ETF is a good investment at this stage.
For readers that haven't heard of this fund before, it gives investors the ability to gain exposure to 100 of the biggest businesses on the NASDAQ, a stock exchange in the US where many of the largest US tech companies are listed.
While some investors may not view it as positively as a few months ago, I think there are plenty of reasons why investors should still consider it. I'll run through some of those now.
Positives
As has been the case since the NDQ ETF's inception, it gives exposure to some of the best and strongest technology businesses in the world.
The NDQ ETF's portfolio includes names like Apple, Microsoft, Nvidia, Amazon, Alphabet, Broadcom, Meta Platforms and Netflix.
Other notable names in the holdings include Costco, Palantir Technologies, Intuitive Surgical, Adobe and plenty more.
These businesses are among the best in the world at what they do, in my opinion. They are leaders at smartphones, computer and office software, AI and related hardware, cloud computing, online shopping, online video, social media and so on.
These companies are generating a good level of earnings from recently-new sources. I also think that if new technology is introduced to society, I believe (at least) one of the above names will be at the forefront of that.
I believe these companies also have strong balance sheets, excellent economic moats and impressive balance sheets.
Negatives about the NDQ ETF to consider
While the market has largely recovered from the April sell-off, I think the uncertainty caused by that is still there.
US tariffs still apply to a lot of goods from a lot of countries and the tariff reprieve for most countries is only for a limited time while the countries try to work something out. It's possible that the most important deals (such as China, other south east Asian nations, India and the EU), in my view, can't be agreed. Of course, many of the businesses inside the NDQ ETF are global businesses that generate their profit from across the world, not just the US.
Some 'value'-focused investors may say that the valuation of the fund has increased in price/earnings (P/E) ratio terms. According to BetaShares, it has a forward P/E ratio of 23.7x.
I don't think that P/E ratio is too expensive considering how they're still growing well and I think the NDQ ETF can still represent good buying at this valuation.
