If you’re interested in investing in technology and innovation, the Nasdaq-100 index is an excellent option for you. Let’s discuss What is Nasdaq and how to invest in Nasdaq from India in detail.
What is Nasdaq
Nasdaq 100 is a stock market index similar to the Nifty 50 in India. Where Nifty 50 tracks India’s top 50 large-cap companies listed on National Stock Exchange (NSE), Nasdaq 100 tracks US’s top 100 companies in technology, consumer services, health care, and telecommunication.
Nasdaq includes some of the most recognizable technology companies globally, like Apple, Microsoft, Intel, and Meta (Facebook). You can also find some major players in various industries, such as Starbucks, and Tesla, among the tech companies.
Currently, the Nasdaq-100 has 103 constituents (stocks), and the index primarily tracks global technology brands with approximately 52% of the index. In contrast, consumer services and healthcare account for 19% and 10%, respectively. The remaining sectors are consumer goods, industrials, and telecommunication services.
By investing in the Nasdaq-100, you can potentially benefit from the companies’ disruption, research, and development, which is a significant driver of economic growth for these firms. For example, Apple’s iPhone revolutionized the mobile phone industry, and Tesla’s electric vehicles are transforming the transportation industry.
It’s important to note that the Nasdaq-100’s performance can be volatile, and past performance does not guarantee future returns. However, in the last 10 years, the Nasdaq-100 has delivered an annualized return of approximately 31%, making it an attractive option for those looking for high-growth potential.
Nasdaq-100 is an excellent option for you to gain exposure to a diversified portfolio of some of the most prominent companies in the world, potentially benefiting from their growth and innovation opportunities.
Benefits of Investing in Nasdaq
Investing in Nasdaq can offer several benefits, including:
- Diversification: Nasdaq is a highly diversified exchange that lists companies from various sectors, making it an excellent option for you to diversify your portfolios.
- Potential for high returns: Nasdaq is home to some of the world’s fastest-growing companies, and investing in these companies can offer significant potential for high returns.
- Exposure to innovation: Nasdaq is known for listing some of the most innovative companies in the world, providing you with exposure to investing in businesses that use cutting-edge technologies and trends. You can also read our articles on investing in Tesla from India or buying Apple shares and investing in Hyundai shares from India to know the direct US stock investment process in detail.
How to Invest in Nasdaq from India
Investing in Nasdaq from India can be done through various channels. Let’s take a look at some of the most popular methods:
#1. Invest in Nasdaq Through Indian Mutual Funds
You can invest in Nasdaq through Indian mutual funds that invest in Nasdaq-based ETFs. These ETFs invest in Nasdaq-listed companies and give you exposure to the US market.
Some of the popular Nasdaq ETFs available in India are listed below
- Motilal Oswal Nasdaq 100 Fund
- ICICI Prudential Nasdaq 100 Fund
- Aditya Birla Sun Life Nasdaq 100 Fund
Investing in Nasdaq through Indian mutual fund ETFs is a straightforward process. You can buy and sell these mutual funds using your domestic Demat account with any broker.
Benefits of investing in Nasdaq through Indian mutual funds
- Easy to invest just like other domestic mutual funds
- No hassle of opening a US trading account
- Low expense ratio making them cheaper alternatives
Disadvantages of investing in Nasdaq through Indian mutual funds
- Lower returns as compared to direct investment
#2. Invest in Nasdaq Through US ETFs
You can also invest in Nasdaq through foreign ETFs using a US trading account. Several Indian brokers offer US stock investment facilities to invest in ETFs that track the Nasdaq index.
You can buy and sell these ETFs through your broker’s app making the process simple and convenient.
Some of the popular foreign ETFs available are –
- Invesco QQQM Nasdaq 100 ETF.
- Fidelity Nasdaq Composite Index ETF
- First Trust Nasdaq 100 Tech Index ETF
Investing in global ETFs involves a few additional steps, such as opening a US trading account with the broker and transferring funds to a US trading account. However, the process is still relatively simple and you’ll learn that in the next section.
Benefits of investing in Nasdaq through US ETFs
- Direct exposure to companies under the Nasdaq index
- Direct ETF investment lowers the expenses
- Better returns than Indian mutual funds
Disadvantages of investing in Nasdaq through US ETFs
- Additional efforts are required in opening a US trading account and fund transfer
- Forex conversion charges when transferring funds to an Indian bank account
- Withdrawal charges after the free limit are over
Step-by-step Process to Invest in Nasdaq from India
#1. Through Indian Mutual Funds
I am taking the example of the Zerodha account to help you understand the process.
Step 1 – Open a demat account
If you already have a demat account then you can skip to the next step. Otherwise, you need to open a demat account.
Step 2 – Log in to your demat account
The coin platform is specifically designed to invest in mutual funds.
Step 3 – Search the mutual fund
You can directly search for the mutual fund that you want to invest in, or search “Nasdaq” in the search bar.
Step 5 – Select from the ‘Buy’ or ‘SIP’ option
- Buy option – if you want to invest a lump sum (one-time) funds
- SIP – if you want to invest a fixed amount at regular intervals like monthly.
Step 6 – Enter the details.
For a lump sum buy, you only need to enter the amount. For SIP, enter the initial investment amount, regular installment amount, frequency of installment, and date of investment.
Step 7 – Place the order.
Click on the “Confirm” button to complete your order.
#2. Through US ETFs
Here is a step-by-step guide on how to invest in Nasdaq from India through US ETFs:
Step 1 – Sign up for an Investment Platform that offers US Trading Account
The first step is to open a trading account with any platform like INDmoney. You can move to the second step if you already have an account.
You can do this by visiting their website and filling out the online registration form. You will need to provide your personal details and upload your KYC documents such as a Pan card, and aadhar card.
Step 2 – Log in to the Investment Platform
Once your account is opened, you can log in to your account with the user credentials provided by the broker.
Step 3 – Add Funds to Your Account
Investing in US stocks from India requires an additional step of adding funds from the bank’s net banking portal to your US trading account.
You can get US bank account details where you have to transfer funds from your broker’s portal or within the app. Taking the example of the HDFC bank account below to help you understand the process –
- Log in to your HDFC bank’s net banking portal
- Go to the Funds Transfer section
- Click on ‘Remit Now’ and then click on “Add as Beneficiary”
- Fill in US bank account details provided by your broker for US stock investment
- Once the US bank is added as a beneficiary, now transfer the required funds to that Beneficiary under the “Remit Now” option.
Step 4 – Search for Nasdaq ETF
You can search for the ETF that tracks Nasdaq by typing “Nasdaq” in the search bar and selecting the ETF from the list.
Step 5 – Place an Order
Once you have finalized your Nasdaq ETF, you can place an order by clicking on the “Buy” option. You can choose the number of shares you want to purchase or you can add the amount that you want to invest in that ETF.
Step 6 – Confirm the order
Confirm your order by clicking on the “Place Buy order” button. Once your order is executed, your shares will be added to your portfolio.
Nifty 50 vs Nasdaq 100 (Performance Comparison)
The Nasdaq-100 has delivered an annualized return of above 31% as compared to the Nifty 50 which has given around 23% annual return in the last 10 years.
That makes Nasdaq an attractive option for you to diversify your portfolio along with better growth potential.
Even if you compare the last 5-year performance Nasdaq managed to give better returns than the Nifty 50.
Investing in Nasdaq from India can give your the opportunity to invest in some of the world’s most innovative and successful companies.
You can choose from two ways, such as Indian mutual funds and foreign ETFs that we have explained above. Both methods of Investing in Nasdaq from India are as easier as investing in the Indian indices like Nifty or Sensex.
If you are also investing in Nasdaq, then which method do you prefer and why, do let me know in the comments section.
Investing in Nasdaq can offer several benefits, including diversification, the potential for high returns, and exposure to innovation.
Yes, Indian investors can invest in Nasdaq through various channels, such as Indian mutual fund ETFs and foreign ETFs offered by domestic brokers.
Some of the popular Nasdaq ETFs available in India include Motilal Oswal Nasdaq 100 ETF, ICICI Prudential Nasdaq 100 ETF, and Aditya Birla Sun Life Nasdaq 100 ETF.
Some of the popular foreign ETFs available to Indian investors include Invesco QQQ ETF, Vanguard Information Technology ETF, and First Trust Dow Jones Internet Index Fund.
The process of investing in Nasdaq through Indian mutual fund ETFs involves opening a Demat account with a broker, completing the KYC process, funding the account, choosing the Nasdaq ETF, and buying the ETF through the Demat account.
The process of investing in Nasdaq through US based ETFs involves opening an international trading account with the broker, completing the KYC process, funding the account, choosing the Nasdaq ETF, and buying the ETF through the international trading account.
Yes, you can invest directly in Nasdaq-listed companies through ADRs (American Depository Receipts) and GDRs (Global Depository Receipts) offered by Indian brokers.
Like any other investment, investing in Nasdaq involves some level of risk. However, by diversifying your portfolio and choosing ETFs that align with your investment goals and risk appetite, you can minimize your risk.
The minimum investment required to invest in Nasdaq depends on the ETF you choose and the brokerage you use. Typically, the minimum investment is around Rs. 5000.
You have to pay taxes on capital gains –
Long-term capital gains (LTCG) if invested for more than 24 months – 20% with indexation benefit
Short-term capital gains (STCG)if invested for less than 24 months – As per income tax slab rates