The Nasdaq-100 (NDX) is a stock market index that tracks the performance of 100 of the largest non-financial companies listed on the Nasdaq stock exchange. It is a modified capitalization-weighted index, meaning that the stocks’ weights in the index are based on their market capitalizations, with certain rules capping the influence of the largest components.
Key Points:
- Composition: The index is dominated by technology companies, but also includes companies from other sectors such as telecommunications, biotechnology, media, and retail.
- Market Cap: As of October 29, 2024, the Nasdaq-100 has a market capitalization of over $20 trillion.
- Performance: The Nasdaq-100 is one of the best-performing stock market indexes in the world, with a long-term track record of outperforming other major indexes.
- Volatility: The Nasdaq-100 is a more volatile index than the S&P 500, due to its concentration in technology stocks.
- Dividends: The Nasdaq-100 has a lower dividend yield than the S&P 500, as many of its constituent companies are growth stocks that reinvest their earnings back into the business.
How to Invest in the Nasdaq-100:
There are several ways to invest in the Nasdaq-100:
- Exchange-Traded Funds (ETFs): ETFs track the performance of the Nasdaq-100 index and trade on stock exchanges. Popular ETFs that track the Nasdaq-100 include the Invesco QQQ Trust (QQQ) and the PowerShares QQQ Trust (QQQC).
- Mutual Funds: Mutual funds that invest in the Nasdaq-100 are another option. These funds are actively managed by professional fund managers.
- Direct Stock Ownership: You can also invest in the Nasdaq-100 by buying shares of individual companies that are included in the index.
Important Considerations:
- Risk: The Nasdaq-100 is a more volatile index than the S&P 500, so it is important to be aware of the risks involved before investing.
- Diversification: It is important to diversify your investments across different asset classes and sectors.
- Long-Term Perspective: The Nasdaq-100 is a long-term investment. It is important to have a long-term investment horizon when investing in this index.