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As most investors know, 2022 was a tough year for most of us. The S&P/ASX 200 Index (ASX: XJO) has lost almost 10% year-to-date (it was a lot more before this bright October). And many ASX 200 stocks fared even worse. But think about it BetaShares NASDAQ 100 ETF (ASX: NDQ).
Through 2022, this NASDAQ 100 ETF index was one of the most successful exchange traded funds (ETFs) on the ASX. It enjoyed several years of double-digit profits and even took off CORONAVIRUS INFECTION COVID– broken 2020 with an increase of about 30%.
But so far in 2020, this ETF has been brought back to earth, and in full. BetaShares NASDAQ 100 units at the beginning of the year cost $36.58. Today, this ETF closed at $27.21 per unit. That represents a year-to-date loss of 25.6% or so.
So what’s going on here? Why has this star performer suddenly become unpopular with investors?
Why did the BetaShares NASDAQ 100 ETF lose a quarter of its value in 2022?
Well, an ETF and its performance are only as strong as its underlying holdings. In the case of the BetaShares NASDAQ ETF, those underlying holdings are the 100 companies that make up the NASDAQ 100 Index. NASDAQ is one of the two largest stock exchanges in the United States. It has made a name for itself as a “tech-heavy” exchange, with most of the country’s biggest tech names visiting the house.
That’s why companies like Apple, Amazon.com, Alphabet, Tesla and Microsoft are the main components of Art NASDAQ-100 index (NASDAQ: NDX ), as well as the NASDAQ 100 ETF.
The NASDAQ ETF also contains other major technology companies such as Adobe, NVIDIA, Netflix and Meta (formerly known as Facebook).
Therefore, any analysis of NASDAQ 100 ETF performance should begin with such companies. And looking at tech stocks like this, we can immediately see why the NASDAQ 100 ETF is struggling this year.
Apple shares have lost nearly 18% of their value in 2022. Microsoft lost 31%, while Amazon lost 32%. Tesla fell 43.8%, while Alphabet shed 34.5% of its value.
now according to the latest provider data, Apple accounted for a whopping 13.8% of the Betashares NASDAQ 100 ETF’s underlying portfolio. Microsoft accounts for another 9.9%, and Amazon, Alphabet and Tesla – 6.8%, 6.7% and 4%, respectively.
So there was no way this ETF was going to have a good year with its core holdings losing numbers like that.
That’s why this year has been so terrible for the BetaShares NASDAQ 100 ETF. These are the companies that have driven this fund to impressive returns in recent years. But they prove that in 2022 the stick has two ends.