Nasdaq trackers for S&S ISA

nick5990

I'm an existing HL client. I am wanting to start investing in a tracker of the NASDAQ in a S&S ISA after doing some performance comparisons over the last few years. E.g. the Nasdaq 100 or Nasdaq composite. I'm aware that the below are able to be dealt on HL, however the prices are too expensive for me for an initial eg £100 investment.

1) iShares nasdaq 100 ETF - Buy: 41,736.00p - https://www.hl.co.uk/shares/shares-search-results/i/ishares-vii-plc-nasdaq-100-ucits-etf-usd-ac
2) INVESCO MARKETS III PLC EQQQ NASDAQ 100 UCITS ETF (EQQQ) - Buy 18,176.00p - https://www.hl.co.uk/shares/shares-search-results/i/invesco-markets-eqq-nasdaq-100-ucits-etf
3) FIRST TRUST PORTFOLIOS FUNDS FIRST TRUST NASDAQ 100 EQ WEI (QQEW) - Buy: $70.89 - https://www.hl.co.uk/shares/shares-search-results/f/first-trust-portfolio-nasdaq-100-eq-wei/share-research

Any ideas on where I can find cheaper (buy price) of reputable nasdaq trackers? Idealing I'm looking at £10 / $12 per unit or under.

bowlhead99

I'm sure lots of people will be along to tell you that investing solely in the Nasdaq100 because it had good previous performance is not a great way to get exposure to global stock markets.

But putting that aside, the real problem is that whatever ETF you pick, reputable and profitable stockbrokers will charge you a dealing fee every time you make a trade on the stock exchange. So exchange traded funds can be crazy expensive to buy in small quantities.  For example, if you pay a £5 dealing fee to invest your £100 into an ETF, you only have a £95 investment, which would have to rise in value by 5.2% just to be worth the £100 you started with, and then it would have to rise another 5% to be worth £105 so that when you sold it and paid the £5 dealing fee you would get your £100 back in your hand. That's ignoring the fact that if you buy ETFs denominated in dollars and are only doing a small deal (e.g. £100 rather than £25,000) you might need to pay 0.5-1.5% commission on the FX trade each way.  So the stockmarket has to be running fast for you to even stand still.

The only way to get around this when buying ETFs is to use a broker that doesn't charge any fees for dealing on the stock exchange so doesn't make any money and may eventually go out of business leaving you without access to your assets for a while until it all gets sorted out; or to use one that lets you invest in ETFs from a restricted range of its own products for an ongoing percentage-based fee (e.g. Vanguardinvestor.co.uk charges 0.15% of assets per year for the service, but only sells Vanguard ETFs and open ended funds - they don't specifically do a NASDAQ tracker).

If you have found the elusive fee-free reliable S&S ISA broker and are looking to spend an initial £100, it seems to me you could just up the amount you were willing to invest to £181 in the case of EQQQ or about £115-120 in the case of a couple of shares of QQEW.  Presumably £100 is not the only amount you are ever going to invest.  If you were going to invest £100 per month, just invest about £200 every 2 months instead or some other amount / frequency. There is no particular need to have ten or more shares of the tracker fund when you invest £100, because whether you have 10 x £10 shares or 100 x £1 shares or 1x £100 share, it is still £100 invested in an investment product tracking the NASDAQ and if the NASDAQ goes up 50%, your £100 will go up 50%. 

With smaller amounts it is often better just using open ended funds (OEICs and UTs) via an investment platform rather than something that needs to be traded on a stock exchange such as an ETF or investment trust, because OEICs allow fractional share ownership and many of the investment platforms just charge percentage-based fees to hold them with no buy/sell transaction cost.  Though I'm not aware of any NASDAQ100 trackers structured as OEICs because it is a very niche type of investment. You may be better resetting your expectations and looking at something more mainstream.

Albermarle

In other words ETF's and shares are not suitable for people drip feeding small amounts.