Speaking to InvestorDaily, Betashares senior investment strategist Cameron Gleeson said the appeal lies in the index’s concentration of firms driving structural global change.
“Most Australian investors would acknowledge that our local market is somewhat limited in the opportunity set. The ASX 200 is dominated by miners and banks, which are typically mature and often cyclical industries,” he said.
Gleeson explained that companies that make up the Nasdaq 100 – such as Microsoft which has consistently invested capital in new areas of expansion, including cloud computing, gaming, cyber security and AI – have positioned themselves at the forefront of long-term trends.
“They’ve [Microsoft] been able to create these platforms where a lot of the initiatives and innovations that they’ve generated are able to be used across multiple parts of their business,” he said.
“So, you think about how AI can be used in, for example, Office Suite, or can be used in cyber security solutions and alike … it’s really that investment in R&D that’s driven new product lines and the scalable platforms that deliver solutions to clients, [and] the value those solutions are giving clients means that people are prepared to pay for their products and services.”
Gleeson added that the composition of the index has also evolved. While Microsoft and Apple have been long-term stalwarts, other companies have surged up the ranks.
“It’s easy to forget that NVIDIA was a relatively small company 10 years ago,” Gleeson said. “By holding a diversified index, investors don’t have to pick individual winners. As companies grow, [their] exposure grows too.”
Newer names such as Palantir and Broadcom recently joined the upper echelon further reflecting the dynamic nature of the index and its ability to capture emerging opportunities, according to the senior strategist.
He added that the most recent US earnings season has reinforced this trend.
The broader US equity market delivered growth earnings of around 12 per cent, while Nasdaq 100 has achieved around 23 per cent.
“From a long-term investor standpoint, the most important driver of returns is strong, stable earnings growth. Nasdaq has consistently delivered this,” he said.
What has been especially encouraging in recent months is the rapid uptake of AI subscriptions by US businesses, with the proportion of companies paying for services almost doubling.
This, Gleeson argued, is an early sign that the heavy capital expenditure by technology companies is beginning to generate tangible returns.
These trends have made the Nasdaq 100 an increasingly popular choice for Australian investors seeking exposure to global growth through Betashares’ NDQ ETF.
The ETF has attracted $500 million in inflows so far in 2025, and is on track to hit $800 million for the year, following $843 million in 2024 and $815 million in 2021.
Now, NDQ is approaching $7 billion in funds under management (FUM) after more than a decade of strong returns, having delivered about 20 per cent per annum since inception compared with around 9.5 per cent for the Australian equity market.
Gleeson added the impact of compounding over time has been particularly impressive.
“If you’d invested $10,000 in NDQ on day one, that would be worth roughly $65,000 today. In comparison, the same investment in the Australian market would be about $25,000. That is a huge difference in terms of outcomes,” he said.
“What NDQ has offered [Australian investors] an opportunity to participate in the future. These are global companies, obviously listed in the US, and it’s been a great tool to drive portfolio outcomes and diversification.”
While some economists predict a slowdown in the US economy, Gleeson pointed out that significant investments by Nasdaq companies are supporting broader growth through flow-on effects to sectors such as construction and manufacturing.
He added that the structural nature of technology-led growth provides resilience even when cyclical pressures emerge.
Although valuations of high-growth companies can be sensitive to interest rate moves, he noted that any downturn could prompt the US Federal Reserve to cut rates, which would in turn support companies in the index.
“The key right now is the monetisation of AI, but history shows wave after wave of innovation has underpinned Nasdaq’s performance,” he said. “This AI wave will not be the last, and NDQ continues to give Australian investors a way to ride that story.”
