A stock market index tracks how part, or all, of the market is performing by looking at the performance of select, representative stocks. Popular US indices include the NASDAQ Composite, NASDAQ 100, Dow Jones and S&P 500. Popular UK indices include the FTSE 100 and FTSE 250.
You can invest in an index through an index fund, which holds stocks included in the index or seeks to replicate the performance of the index with similar stocks. A good index fund performs similarly to the index it’s attempting to mirror.
What’s the difference between the Nasdaq Composite and the Nasdaq 100?
The Nasdaq Composite includes virtually all of the stocks listed on the Nasdaq stock exchange. In order to be eligible to be part of the index, a stock should be listed exclusively on the Nasdaq market and must be a common stock of a company (so any preferred stocks and ETFs will be excluded). The index is supposed to represent the whole Nasdaq market, rather than the largest companies.
The Nasdaq 100 index is a collection of 100 stocks in a range of sectors, including industrial, technology, retail, telecommunication, biotechnology, healthcare, transport, media and service companies. It specifically does not include banking companies, insurance firms, brokerage firms or mortgage loan companies. These sectors are found in the Nasdaq Financial-100.
Qualification criteria for companies in the Nasdaq 100
Companies included in the Nasdaq 100 index must satisfy the following:
- Be listed exclusively on Nasdaq in the Global Select or Global Market tiers
- Have been publicly offered on an established US market for at least 3 months
- Have an average daily volume of 200,000 stocks
- Be current in regards to quarterly and annual reports
- Not be in bankruptcy proceedings
Out of all the companies that satisfy this criteria, only the top 100 companies (plus or minus a few) by market capitalization get to be in the index. The list is rebalanced annually, although there are some instances when it’s rebalanced earlier.
10 popular Nasdaq index stocks
- Alphabet (C shares)
- Alphabet (A shares)
- Meta Platforms
- ASML Holding
Nasdaq Composite vs Nasdaq 100: Which is bigger?
The Nasdaq Composite is virtually every stock on the exchange, while the Nasdaq 100 is just a selection of 100 stocks that you can find on the exchange. Naturally, this means that the Nasdaq Composite is a lot larger than the Nasdaq 100 in terms of stock volume and value.
Nasdaq Composite vs Nasdaq 100: Which is worth more?
Again, because the Nasdaq 100 is a mere snippet of the Nasdaq Composite, the Nasdaq Composite is worth a lot more. It’s estimated that the Nasdaq stock exchange is worth $23.46 trillion.
Nasdaq Composite vs Nasdaq 100: Which is more diversified?
Both the Nasdaq Composite and the Nasdaq 100 are heavily weighted towards technology stocks—51.42% and 41% respectively. There aren’t any financial companies in the Nasdaq 100, so you won’t be very diversified if you invest solely in this index. But you could also invest in the Nasdaq Financial-100, which only includes financial companies.
Platforms that let you invest in Nasdaq index stocks
These trading apps allow you to invest in companies listed on the Nasdaq as well as funds/ETFs.
What’s the best Nasdaq 100 and Nasdaq Composite index fund?
Here are some of the best performing Nasdaq 100 and Nasdaq Composite funds according to JustETF.
|Icon||Fund||5-year performance||1-year performance (to May 2022)||Link to invest|
|iShares NASDAQ 100 (CNX1)||140.72%||3.37%||Buy on Interactive Brokers|
|Invesco NASDAQ 100 (EQSG)||N/A||5.87%||Buy on Interactive Brokers|
|Amundi NASDAQ 100 (ANXG)||147.14%||5.61%||Buy on Interactive Brokers|
|Lyxor NASDAQ 100 ETF (NASL)||141.72%||3.21%||Buy on Interactive Brokers|
|Xtrackers NASDAQ 100 (XNAQ)||N/A||3.46%||Buy on Interactive Brokers|
|Icon||Fund||5-year performance||1-year performance (to March 2022)||Link to invest|
|Fidelity NASDAQ Composite (FNCMX)||96.87%||-9.55%||Buy on Interactive Brokers|
Popular stocks in the Nasdaq 100 and Nasdaq Composite
How to invest in the Nasdaq 100 and Nasdaq Composite
- Find an NYSE or Nasdaq ETF, index fund or mutual fund. Some index funds track the performance of all stocks on the index, whereas others only track a certain number of stocks or are weighted towards specific stocks. You should select the fund that best suits your investment goals.
- Open a stock trading account. To invest in ETFs or mutual funds, you’ll need to open a trading account with a broker or trading platform. 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 stocks. Some of the index funds above are listed on the Toronto Stock Exchange (TSX).
- Deposit funds. You’ll need to deposit funds into your account to begin trading. You may need to pay a foreign conversion fee to convert your Canadian dollars into US dollars, so you can buy US stocks.
- Buy the index fund. Once your money has been deposited, you can buy the index fund. Most ETFs or index funds come with a small annual fee to cover fund management expenses.
There are several indices that track stocks on the Nasdaq including the Nasdaq Composite and the Nasdaq 100. These are designed to give you some insight into how a particular market is performing, with the Nasdaq 100 focusing solely on companies that aren’t in the financial industry. You can invest in both of these indices with index funds. Nasdaq Composite funds exist but are harder to come by.
Consider diversifying your investments by exploring stocks in multiple sectors and funds that track indices in other countries.
Frequently asked questions
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