The Betashares Nasdaq 100 ETF (ASX: NDQ) and the Vanguard Australian Shares Index ETF (ASX: VAS) are two very popular but very different ASX exchange traded funds (ETFs).
Both can be useful long-term investments, but they give investors exposure to very different parts of the share market.
One is focused on the Nasdaq 100 and many of the world's most important technology and growth companies. The other gives broad exposure to the Australian share market, including banks, miners, healthcare companies, retailers, and industrial shares.
So, which one makes more sense for investors today?
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What does the NDQ ETF offer?
The Betashares Nasdaq 100 ETF gives investors exposure to 100 of the largest non-financial companies listed on the Nasdaq.
This means the fund is heavily exposed to global technology and innovation.
Its holdings typically include businesses involved in cloud computing, cybersecurity, artificial intelligence, semiconductors, software, digital advertising, ecommerce, streaming, and consumer technology, such as NVIDIA (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT), and Apple (NASDAQ: AAPL).
This gives the NDQ ETF a strong long-term tailwind.
The trade-off is volatility. Growth and technology shares can fall sharply when interest rates rise, valuations are questioned, or investors become more cautious. But for investors with a decade-long time horizon, that volatility may be worth accepting.
What does the VAS ETF offer?
The Vanguard Australian Shares Index ETF is very different.
This ASX ETF gives investors exposure to the Australian share market through a broad basket of local shares.
That includes all the major banks, large miners, healthcare companies, supermarkets, infrastructure businesses, insurers, property groups, and other leading ASX companies, such as BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), and Woolworths Group Ltd (ASX: WOW).
The Australian market has historically been attractive for income investors because many large companies pay dividends and, in some cases, offer franking credits.
This is where it has an advantage over the NDQ ETF. Investors seeking growth with some income on the side may find the VAS ETF appealing.
Verdict
Both ASX ETFs look like buys for long-term investors.
The VAS ETF could be the better choice for investors who want Australian exposure, more dividend income, and a simpler way to own a broad slice of the local share market.
However, the NDQ ETF is my pick for investors chasing stronger capital growth over the next decade.
Its focus on global technology leaders gives it exposure to some of the most powerful trends in the world economy. While investors should expect ups and downs along the way, it could be the better option for those willing to accept more volatility in pursuit of higher long-term returns.
