DWS has introduced a new ETF offering low-cost exposure to the Nasdaq 100 Index.
Simon Klein, Global Head of Passive Sales, DWS.
The Xtrackers Nasdaq 100 UCITS ETF has listed on Deutsche Börse Xetra in euros (XNAS GR) and is set to list on the London Stock Exchange in US dollars (XNAS LN).
The ETF employs full direct physical replication to track the index and comes with an expense ratio of just 0.20%. Income is accumulated.
Widely perceived as a proxy for innovative growth stocks, the index consists of 100 of the largest US and international non-financial companies by market capitalization listed on Nasdaq, subject to various diversification requirements.
The index reflects companies across major industry groups including computer hardware and software, communications, retail/wholesale trade, and biotechnology.
The index is known for being ‘tech-heavy’, as is evidenced the current make-up of the top ten holdings: Apple (12.6%), Microsoft (9.1%), Amazon.com (8.7%), Alphabet (6.3%), Tesla (5.4%), Facebook (3.5%), Nvidia (2.6%), Paypal (2.2%), Netflix (2.0%), and Comcast (1.8%).
Commenting on the launch, Simon Klein, DWS’s Global Head of Passive Sales, said: “As investor portfolios evolve to be positioned for the post-Covid-19 innovation economy, we expect demand for our extremely competitively priced Nasdaq 100 UCITS ETF to be high.”
The low price tag means the fund is the cheapest Nasdaq 100 ETFs in Europe as measured by headline fee.
Its closest competitor is the $1.8 billion Lyxor Nasdaq-100 UCITS ETF (NASD LN) which comes with an expense ratio of 0.22%. This fund differs slightly in that it utilizes a synthetic, or swap-based, approach to mirror index performance. This means it is not directly subject to trading costs borne by physically replicating funds and may also offer some tax enhancement owing to its circumvention of withholding tax.
Being a high-growth index, the Nasdaq 100 is not particularly known for dividend payments with roughly half of the index’s constituents presently not making any payments to shareholders; however, as of 26 January, the average dividend yield across all Nasdaq 100 stocks was 0.85%, implying a potential performance boost of 12.75 basis points per annum for the Lyxor fund relative to the Xtrackers product.
Other notable Nasdaq 100 ETFs in Europe include the $6.9bn iShares Nasdaq 100 UCITS ETF (CNDX LN), which comes with an expense ratio of 0.33%; the $5.3bn Invesco Nasdaq 100 UCITS ETF (EQQQ LN) at 0.30%; and the $1.4bn Amundi Nasdaq 100 UCITS ETF (6AQQ GY) at 0.23%. The iShares and Invesco products use direct physical replication, while the Amundi ETF is synthetically replicated.