If an ASX investor is after exposure to some of the United States' best growth shares, the BetaShares Nasdaq 100 ETF (ASX: NDQ) is one of the easiest, simplest and most popular avenues to take.
This exchange-traded fund (ETF) allows Australian investors to own a piece of the 100 largest non-financial shares listed on the Nasdaq stock exchange. The Nasdaq is the exchange known for housing most of the popular tech shares that the US is famous for. You have the 'Magnificent 7' as the headliners, of course, with the likes of Apple, Amazon, NVIDIA and Alphabet dominating the top echelons of this index fund.
But NDQ also offers decent exposure to smaller tech stocks like Netflix, PayPal, Palantir, Qualcomm, Texas Instruments, and Shopify.
With all of these impressive names under one NDQ roof, many ASX investors have NDQ in their ASX portfolios. I used to be one of them, attracted by the easy exposure to what are undeniably some of the best businesses in the world. But not anymore.
I don't have a problem with the BetaShares Nasdaq 100 ETF.
However, I simply found what I believed to be a superior alternative.
NDQ is a great ETF. But it does not come cheap. Unlike other ASX index funds, NDQ does not charge a cheap-as-chips management fee of under 0.1%. In fact, NDQ will cost investors 0.48% per annum, or $48 per year for every $10,000 invested. That's a bit steep for my liking, so a few months ago, I sold my NDQ units and redeployed the capital into a similar ETF that charges a fraction of NDQ's cost.
That ETF was the Schwab U.S. Large-Cap Growth ETF (NYSE: SCHG).
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NDQ, but better?
Yes, this is a US-based ETF, meaning ASX investors will need to buy it on a platform that allows US trading. But aside from this hurdle, I see no reason to own NDQ over SCHG. For one, SCHG invests in a very similar basket of stocks to NDQ. You'll find all of the names mentioned above in its portfolio, albeit with different weightings. You'll even get some tech stocks that aren't on the NASDAQ, and thus, the NDQ ETF. These include Visa, Uber Technologies, and Mastercard.
But the best part? SCHG charges an annual management fee of just 0.04%. That's more than ten times cheaper than NDQ.
The difference between 0.48% and 0.04% might not look like a significant one. But it can make a real difference to investor returns over long periods of time. That's why I switched to SCHG, and haven't looked back since. Something to consider if you like having the US's top growth stocks in your ASX share portfolio.
