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Are you looking to diversify your UK portfolio by branching out into overseas investments? If so, you’ve probably come across the Nasdaq stock exchange. As long as you’ve got a trading account that lets you trade US stocks, you can invest in the Nasdaq from the UK. Here’s what you need to know.
What is the Nasdaq?
The Nasdaq is an American stock exchange based in New York City. It’s the second largest stock exchange in the world after the one that shares its home city, the New York Stock Exchange. Nasdaq was initially an acronym for the National Association of Securities Dealers Automated Quotations. Catchy, we know. The Nasdaq is very technology heavy, being the home to all of the FAANG stocks, which comprise the world’s best-known tech firms (Apple and Facebook, for example).
Can I invest in Nasdaq from the UK?
Yes, there are several ways you can invest in Nasdaq from the UK. These days, many share-trading platforms and brokers offer access to US stock markets. You can buy individual stocks that are listed on Nasdaq or invest in index or tracker funds that mirror the performance of the Nasdaq stock market, for example.
Why should you invest in the Nasdaq?
According to the Nasdaq website, the exchange is “widely considered to be the exchange of choice for innovative companies in technology”, plus other sectors that play a big role in driving US economic growth.
So, if you want to invest in innovative firms with the potential for higher returns, the Nasdaq is worth a look. For UK investors, putting money into US companies as well as UK investments is also a way of diversifying your investment portfolio – an approach that can help manage risk by spreading assets across multiple markets.
Ways to invest in the Nasdaq
There are 2 main ways to invest in the Nasdaq:
- Buy stocks and shares directly in firms listed on the Nasdaq. For example, you could pick a selection of firms in the Nasdaq and buy shares in each of them – though this would only replicate part of the full Nasdaq. You could also consider buying shares in all 100(ish) companies in the Nasdaq-100 index – the Nasdaq’s equivalent of the UK’s FTSE 100.
- Find a Nasdaq ETF (exchange-traded fund), index fund or mutual fund. The effort (and potentially high trading costs) of buying shares in multiple individual companies and updating your investments as companies move in and out of the Nasdaq may seem a bit daunting. If so, a fund that tracks the performance of Nasdaq companies might be a better bet. Some index funds track the performance of all Nasdaq stocks, whereas others only track a certain number of stocks (those in the Nasdaq-100, for example) or are weighted more towards specific stocks. You should select the fund that best suits your investment goals.
How to invest in the Nasdaq
- Open an investment account. In order to invest in Nasdaq shares or funds, you’ll need to open a trading account with a broker or platform that deals in US companies. Keep in mind that some index funds may only be available on certain brokerages or platforms. The providers in our comparison table let you invest in US shares.
- Deposit funds. You’ll need to deposit funds into your account to begin trading. Some brokers may charge you deposit fees or you may need to pay a forex fee in order for your pounds to be converted into US dollars.
- Buy shares or funds. Once your money has been deposited, you can then buy Nasdaq shares or invest in a fund. You’ll generally pay a small annual fee to invest in an ETF or index fund.
Which stocks are on the Nasdaq?
There are more than 3,500 stocks available on the Nasdaq, including many of the largest companies in the world by market capitalisation.
Popular Nasdaq stocks include:
How much does it cost to buy and sell Nasdaq shares?
Some brokers or trading platforms will charge you a commission on every trade, while others may only charge you a foreign exchange fee when you initially deposit pounds, then charge no commission on trades.
It’s important that you understand the fee structure of each platform before using it to trade. Certain brokers or platforms will suit different types of investors, but may prove to be expensive if you’re only investing small amounts.
Below is a breakdown of the basic fees you’ll pay when making a single Nasdaq trade using each broker, as well as the foreign exchange fees involved.
| Platform | Fee for a US trade | Foreign exchange fee |
|---|---|---|
| Fineco | $3.95 (£2.98) | 1% |
| eToro | £0 | 0.5% |
| Hargreaves Lansdown | £11.95 | 1% |
| Stake | £0 | 0.5% |
| Freetrade | £0 | 0.45% |
| Trading 212 | £0 | 0.5% |
| IG | £10 | 0.5% |
Other ways to invest in Nasdaq from the UK
If you want to invest in Nasdaq but don’t want to buy Nasdaq stock directly, you have other options. For example, you can buy an ETF that tracks the performance of the entire Nasdaq index, as well as indices such as the S&P 500 or Dow Jones Industrial Average.
Nasdaq ETFs and tracker funds
There are dozens of ETFs and index tracker funds that give you exposure to certain Nasdaq stocks. Many of these are able to be bought from the UK. Most popular UK trading platforms and brokers will offer at least one Nasdaq index tracker fund. Some and some of the most popular Nasdaq tracker funds include:
- First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW)
- Invesco DWA NASDAQ Momentum ETF (DWAQ)
- PowerShares QQQ (QQQ)
- EQQQ Nasdaq-100 UCITS ETF Dist
- ProShares Equities for Rising Rates ETF (EQRR)
- Fidelity Nasdaq Composite Index Tracking Stock ETF (ONEQ)
- iShares NASDAQ 100 UCITS ETF
Best trading platform for index funds: Saxo
We chose Saxo as our top pick because:
- Invest in over 19,000 stocks, funds and investment trusts
- Use its award-winning trading platforms
- Customer support available 24 hours a day
Need to know: Opening a Saxo share-dealing account requires a high minimum investment (£500).
Read our review of Saxo.
Is the Nasdaq a good investment choice?
Finder expert Zoe Stabler answers
As with any investment, the proof is in the proverbial pudding. Whether you deem investment in the Nasdaq to be successful depends on how your investments perform and, as with all investing, there is risk.
The Nasdaq (and US stock markets in general) has been the powerhouse of global growth for many years. The fact that it’s home to some of the most globally renowned companies has been reflected in its growth. So there’s an argument that it’s worth considering for UK investors looking to expand their portfolios.
That said, it’s also the home of particularly innovative companies…and with high innovation can come high risk, as well as high reward. Many of the stocks in the Nasdaq are dubbed “growth stocks” – companies that are anticipated to grow at a rate significantly above the average growth for the market. But they typically don’t pay dividends, as many FTSE 100 stocks do, and they can be expensive to buy. This means that, if expectations of a company’s growth aren’t met and you need to sell during a downturn, you could stand to make significant losses – as our table of 1-, 3- and 5-year Nasdaq returns (below) illustrates.
Such potential benefits – and potential risks – pose a strong argument for investing for the long term and in as many firms as possible, to manage the risk of underperformance, by individual companies or the market as a whole.
What are the 1-, 3- and 5-year returns on the Nasdaq?
To give you an idea of potential returns of investing in the Nasdaq, below we’ve shown the 1-, 3- and 5 year price returns of the Nasdaq Composite index, starting from 2016. Price returns are directly linked to the index value.
Overall, bar a relatively small downturn in 2018, the Nasdaq has performed strongly. However, because our table shows returns based on year-end figures and at the time of our research we hadn’t yet reached the end of 2022, it doesn’t show the substantial drop in the value of the Nasdaq during 2022. As of 29 September 2022, the Nasdaq Composite was down just over 25% year on year (from 14,512 to 10,692).
This shows the importance of investing for the long term – and of not panic-selling when the value of investments drops. While the Nasdaq may take a while to recover, history tells us that most stock markets bounce back from downturns eventually. After all, even after a substantial drop, the September 2022 value of the Nasdaq is still substantially higher than it was 5 years previously.
| Year | Index value* | 1-year return | 3-year return | 5-year return |
|---|---|---|---|---|
| 2021 | 15644.97 | 21.4% | 137.6% | 161.5% |
| 2020 | 12888.28 | 43.1% | 86.7% | 157.4% |
| 2019 | 9006.62 | 36.8% | 50.5% | 89.3% |
| 2018 | 6584.52 | -4.6% | 31.5% | 58.4% |
| 2017 | 6903.39 | 15.4% | 45.1% | 133.2% |
| 2016 | 5983.12 | 19.5% | 43.9% | 129.7% |
*At the end of the year
What are the Nasdaq Composite and Nasdaq-100?
The Nasdaq Composite (COMP) is a stock market index that tracks the common stocks and securities on the Nasdaq. The Nasdaq-100 is an index that tracks a subset of the top 100 non-financial stocks on the Nasdaq. You can invest in these indices by buying an ETF that specifically tracks the performance of the stocks in the index.
Compare Nasdaq share trading platforms
Table: sorted by promoted deals first
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
Bottom line
The Nasdaq is home to some of the largest stocks in the world, so there’s no doubt why investors are interested in trading on it. You can either choose individual shares that are listed on the exchange and invest in those, or invest in ETFs or funds that track the exchange. Make sure you choose a broker that lets you trade US stocks and you know about the additional currency exchange fees before you begin.
Frequently asked questions
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