RIO DE JANEIRO, BRAZIL – Investing in one of the world’s best-known technology indexes will be available to Brazilians as of today. XP closed an agreement with American Nasdaq to launch an ETF of its most famous benchmark, the Nasdaq 100, which comprises a theoretical portfolio of the 100 largest technology-based non-financial companies in the electronic exchange. Combined, these companies have a market value of over US$15 trillion.
It is the first local ETF – acronym for “exchange-traded fund” – of the Nasdaq 100 on a Latin American stock exchange. ETFs are funds that reproduce the variation of an index and have shares traded on the exchange. XP’s launch will be traded under the ticker NASD11 on B3.
Investors of all profiles, including retail, will have access to the product, according to XP. The minimum investment will be R$10 (US$1.18), with a 0.3% administration fee, according to the Brazilian group. In addition to the indicator’s yield, the Nasdaq 100 ETF will also incorporate the dollar’s exchange rate variation.
“The Nasdaq 100 has always been associated with technology giants such as Apple, Microsoft, Alphabet [Google’s parent company], Intel and Facebook, but the benchmark is much broader and includes innovative companies from various industries, such as Moderna, Zoom, MercadoLibre and Peloton,” said Sean Wasserman, vice president and head of index and advisory services at Nasdaq. “The index represents the new global industry,” added the executive.
According to Fabiano Cintra, international funds specialist at XP, “these companies are changing the global economy and ETFs allow Brazilian investors to be exposed to this case of secular growth.”
According to Wasserman, “the Nasdaq 100 has a legacy of innovation, of new industries using technology to change the economy and society.”
The Nasdaq 100 has been around for 35 years. The current portfolio includes companies from a variety of sectors, in addition to technology stocks. These are companies in areas such as services, consumer, e-retail, healthcare, finance, and telecommunications. Companies range from giants such as Amazon, Netflix, and the “big techs” mentioned by the Nasdaq 100’s vice president, to platforms such as Booking.com, eBay, and Baidu. The portfolio also includes gaming brands such as Eletronic Arts.
According to Wasserman, the benchmark “consistently outperforms the S&P 500.” The Nasdaq 100 is up 4.60% this year through May 20. The S&P 500 has a 10.94% gain in the period. Although in 2021 the New York Stock Exchange benchmark will be ahead, in the medium and long term, the index of the electronic stock exchange has an advantage.
From January 2020 until Thursday, the Nasdaq 100 has posted a 54.38% increase over the S&P 500’s 27.2%. Over the past five years, the Nasdaq’s gain reaches 177.20%. The S&P index, in the same period, posted a positive variation of 102.86%.
The new ETF is part of XP’s Trend family, which comprises indexed investment products launched by the Brazilian digital platform. This group of over 60 funds accounts for R$18 billion in assets under management.
XP’s Cintra explains that the company entered the ETF market only six months ago. NASD11 is the 6th such index fund launched since November 2020.
Wasserman pointed out that the partnership may be extended in the future. “We are firmly interested in expanding the Nasdaq index brand in Brazil in partnership with XP.” According to Cintra, the American group has several benchmarks with different strategies that could be brought to Brazil, but there is still no definition about new ETFs.
Nasdaq has a large benchmark portfolio that ranges from “smart beta” solutions, that is, that seek to combine advantages from passive with some active strategies, to global stock indexes, with a focus on dividends and other strategies.