Finder Award
Interactive Brokers
- Access to international stock exchanges
- Low margin rates
- Powerful research tools
The Nasdaq is a US exchange on which stocks are bought and sold, whereas the Dow Jones is an index that tracks 30 major stocks listed on US exchanges. The Nasdaq Composite is an index that tracks most of the stocks listed on the Nasdaq exchange.
These terms might sounds similar, but they’re actually very different. Here’s how the Nasdaq and Dow Jones compare in terms of size, value, diversification and performance.
What's the difference between a stock exchange and an index?
A stock exchange is an electronic marketplace on which stocks (and other securities) are traded. An index tracks market performance by tracking the performance of a group of stocks.
Stocks can be tracked in more than one index. An index can group stocks by sector, industry, region or any other characteristic. Think of a stock exchange as Spotify and an index as a playlist.
Nasdaq vs Nasdaq Composite
The Nasdaq Composite (sometimes confusingly referred to as simply “the Nasdaq”) is a stock market index that tracks most of the stocks listed on the Nasdaq stock exchange.
When people talk about investing in a Nasdaq fund or exchange-traded fund (ETF), they’re likely referring to a fund that holds stocks listed on the Nasdaq Composite. As an index, it’s easier to compare to the Dow Jones.
To be included in the Nasdaq Composite, a stock must be a common stock and listed exclusively on the Nasdaq exchange. Preferred stocks and ETFs are excluded. The index is supposed to represent the whole Nasdaq, not just its largest stocks.
The Dow Jones
The Dow Jones is an index that tracks 30 prominent US companies. It’s price-weighted, so each stock will impact the index’s performance in proportion to its price. The companies in the Dow Jones are chosen by representation from The Wall Street Journal and S&P Global, which is somewhat subjective.
Popular stocks in the Nasdaq Composite and Dow Jones
Nasdaq
- Apple
- Microsoft
- Amazon
- Tesla
- NVIDIA
- Alphabet (C shares)
- Alphabet (A shares)
- Meta Platforms
- ASML Holding
- Broadcom
Dow Jones
- Apple
- Microsoft
- Johnson & Johnson
- UnitedHealth
- Visa
- Walmart
- Procter & Gamble
- JPMorgan Chase
- Home Depot
- Chevron
Nasdaq vs Dow Jones: Which is bigger?
The Nasdaq Composite is larger than the Dow Jones by a pretty substantial margin. The Dow Jones only tracks 30 stocks, while the Nasdaq Composite tracks more than 2,500 stocks.
Nasdaq vs Dow Jones: Which is worth more?
The Nasdaq Composite’s market capitalization is likely very close to the Nasdaq stock exchange’s market cap, which is $23.46 trillion USD (around $32.04 trillion CAD). Meanwhile, the Dow Jones has a market capitalization of $10.35 trillion USD (about $14.13 trillion CAD).
When you consider that the Dow Jones tracks just 30 stocks and the Nasdaq Composite tracks a couple thousand stocks, you get a sense of how large the stocks in the Dow Jones are.
Nasdaq vs Dow Jones: Which is more diversified?
If you invest in a fund that mimics the performance of the Dow Jones index, you’ll only be exposed to the performance of 30 big players on US exchanges. Investing in a fund that mimics the performance of the Nasdaq Composite gives you access to those stocks plus a range of smaller companies. This can be riskier, but there might be an opportunity for greater growth.
The Nasdaq Composite tracks a lot of technology stocks, with stocks in this sector comprising half of the Nasdaq exchange. It’s quite spread out across other sectors as well, but tech is the key one. Technology is the largest sector represented in the Dow Jones, with 20% of stocks falling into this sector.
Platforms that let you invest in the Nasdaq and Dow Jones
These trading apps allow you to invest in companies within the indices or funds that track these companies.
Finder Award
Scotia iTRADE
- Earn between $50 - $2,000 cashback
- Active trader discount
- Access to advanced trading tools
What’s the best Dow Jones and Nasdaq index fund?
Compare performance data for popular Dow Jones and Nasdaq funds:
| Icon | Fund | 5-year performance | 1-year performance (to Oct 2022) | Link to invest |
|---|---|---|---|---|
 | iShares Dow Jones U.S. ETF (IYY) | 10.85% | -19.38% | Invest with Interactive Brokers |
 | SPDR Dow Jones Global Real Esta (SPYJ) | 3.62% | 2.48% | Invest with Interactive Brokers |
 | Lyxor Dow Jones Industrial Average (LUX) UCITS ETF (C010) | 10.76% | -12.22% | Invest with Interactive Brokers |
| Icon | Fund | 5-year performance | 1-year performance (to Oct 2022) | Link to invest |
|---|---|---|---|---|
| iShares NASDAQ 100 Index ETF (CAD-Hedged) (XQQ) | 14.11% | -28.69% | Invest with Interactive Brokers |
 | Invesco NASDAQ 100 Index ETF (QQC) | 0.00% | 0.00% | Invest with Interactive Brokers |
| Lyxor Nasdaq-100 UCITS ETF – Ac (LYMS) | N/A | N/A | Invest with Interactive Brokers |
 | BetaPro NASDAQ-100 -2x Daily Bear ETF (HQD) | -36.15% | 48.53% | Invest with Interactive Brokers |
 | Fidelity NASDAQ Composite Index Fund (FNCMX) | 8.14% | 20.54% | Invest with Interactive Brokers |
Is it better to invest in the Dow Jones or the Nasdaq?
Finder expert Zoe Stabler answers
The Nasdaq Composite has performed better than the Dow Jones historically, although you shouldn’t take this to mean that it will in the future. It is more diversified and gets you access to blue-chip stocks as well as smaller players in the market. The Dow Jones gets you access to large companies, particularly technology companies.
The Nasdaq Composite is a pretty well-diversified set of shares alone, although you’d want to add some global diversification by investing in some stocks in other countries.
The Dow Jones could be paired with other index funds or ETFs as it’s only 30 companies and doesn’t offer much diversification.
What are the top holdings in the Dow Jones and Nasdaq?
| Dow Jones | Nasdaq | ||
|---|---|---|---|
 | Apple | | Apple |
 | Microsoft | | Microsoft |
 | Johnson & Johnson |  | Amazon |
 | UnitedHealth |  | Tesla |
 | Visa |  | NVIDIA |
How to invest in the Dow Jones and Nasdaq Composite
- Find a Nasdaq and Dow Jones ETF 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. 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 Canadian and international 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.
Compare Dow Jones and Nasdaq trading platforms
These trading apps allow you to invest in companies within the indices or funds/ETFs that hold stocks in Nasdaq and Dow Jones companies.
1 - 6 of 6
Bottom line
The Nasdaq is a stock exchange in the US, known for listing a high proportion of technology stocks. The Nasdaq Composite tracks most of the stocks listed on the Nasdaq. The Dow Jones is an index that tracks 30 major US stocks. Dow Jones stocks are hand picked, whereas Nasdaq Composite stocks include all stocks that meet certain basic criteria.
Frequently asked questions
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.
More on investing
How do ETFs work?
Your guide to how ETFs work and whether this type of investment is right for you.
Read more…
Best stock app for beginners in 2023
The best stock trading app for beginners is easy to use and offers free trades.
Read more…
How to read stock charts
Learning how to read stock charts and recognize chart patterns can unlock your success as a trader.
Read more…
3 upcoming IPOs to watch in January 2023
A brand developer, healthcare company and wealth management group are among the IPOs expected to take place this month.
Read more…
What are stocks?
Owning a stock means you own part of a company and can potentially grow your wealth. But there is a risk of loss.
Read more…
Best time to buy stocks
The best time to buy stocks could be right after an IPO, during expansion periods or when other investors are buying or selling.
Read more…
More guides on Finder
-
How to buy Brera (BREA) stock in Canada when it goes public
Everything we know about the Brera IPO plus information on how to buy in.
-
How to buy TXO Energy (TXO) stock in Canada when it goes public
Everything we know about the TXO Energy IPO plus information on how to buy in.
-
How do ETFs work?
Your guide to how ETFs work and whether this type of investment is right for you.
-
How to buy Torex Gold stock in Canada
Steps to owning and managing TXG stock, with 24-hour and historical pricing before you buy.
-
Best stock app for beginners in 2023
The best stock trading app for beginners is easy to use and offers free trades.
-
How to read stock charts
Learning how to read stock charts and recognize chart patterns can unlock your success as a trader.
-
3 upcoming IPOs to watch in January 2023
A brand developer, healthcare company and wealth management group are among the IPOs expected to take place this month.
-
What are stocks?
Owning a stock means you own part of a company and can potentially grow your wealth. But there is a risk of loss.
-
Best time to buy stocks
The best time to buy stocks could be right after an IPO, during expansion periods or when other investors are buying or selling.
-
How to analyze a stock
Learn how to research stocks and find the right investment opportunities in 4 steps.