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The NASDAQ is a stock exchange in the US, which is where companies list their stocks. It’s well-known for its high proportion of technology stocks. Meanwhile, the Dow Jones is a stock market index in the US. It’s a list of 30 big-name stocks listed on US stock exchanges.
What's the difference between a stock exchange and an index?
A stock exchange is where stocks are listed, while an index is a collection of stocks — maybe because of their sector, country or ethics. Think of a stock exchange as Spotify and think of an index as a playlist — that’s the difference between them.
There can be lots of indices that might cross over some stocks — you’ll find Apple in an index of technology stocks, and you’ll also find it in indices that list top US stocks by market cap, such as the S&P 500. Equally, you’ll find Queen’s Don’t Stop Me Now in both a “Best of British” playlist and a “Road trip” playlist (trust me, I checked).
NASDAQ vs NASDAQ Composite
There’s a stock market index that comprises most of the NASDAQ stock exchange called the NASDAQ Composite, which investors sometimes refer to as just “the NASDAQ”. This can be confusing, but most of the time when people talk about investing in a NASDAQ fund or exchange-traded fund (ETF), this is likely what they’re talking about. As it’s also an index, it’s easier to compare to the Dow Jones.
To be part of the NASDAQ Composite, 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 Dow Jones
The Dow Jones is an index of 30 prominent US companies. It’s price-weighted, so the stock market price of each company impacts the proportion of the index that it represents. The companies in the Dow Jones are chosen by representation from The Wall Street Journal and S&P Global, so they can be subjective.
List of top 10 stocks from each
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 is only 30 stocks while the NASDAQ Composite is more than 2,500 stocks. The 30 stocks in the Dow Jones are large companies with a high market capitalisation, which is the value of all the shares combined.
NASDAQ vs Dow Jones: Which is worth more?
The NASDAQ Composite’s market capitalisation is likely very close to the NASDAQ stock exchange’s market cap, which is $23.46 trillion (around £18.72 trillion). Meanwhile, the Dow Jones has a market capitalisation of $10.35 trillion (about £8.25 trillion). When you consider that the Dow Jones is just 30 stocks and the NASDAQ Composite is a couple of thousand, you get a sense of how large the stocks are in the Dow Jones.
NASDAQ vs Dow Jones: Which is more diversified?
The Dow Jones only gives you access to 30 big players on US exchanges while the NASDAQ Composite gets you access to those and a range of smaller companies. This can be riskier but might have the opportunity for more growth.
The NASDAQ Composite has a lot of technology stocks, with this sector taking up half of the exchange. It’s quite spread out across other sectors as well, but this is a key one. Technology is the largest sector in the Dow Jones, with 20% of holdings in the sector.
NASDAQ vs Dow Jones chart
Platforms where you can invest in the NASDAQ and the Dow Jones
These trading apps allow you to invest in companies within the indices directly or to invest in funds/ETFs.
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What’s the best Dow Jones and NASDAQ index fund?
Here are some of the best-performing Dow Jones and NASDAQ funds according to justETF:
| Icon | Fund | 5-year performance | 1-year performance (to May 2022) | Link to invest |
|---|---|---|---|---|
 | iShares Dow Jones industrial average (CIND) | 64.21% | 5.66% | Invest with eToroCapital at risk |
 | SPDR Dow Jones Global Real Estate ETF (GBRE) | 9.43% | -1.62% | Invest with IGCapital at risk |
 | Lyxor Dow Jones Industrial Average (DJEL) | 63.93% | 5.94% | Invest with IGCapital at risk |
| Icon | Fund | 5-year performance | 1-year performance (to May 2022) | Link to invest |
|---|---|---|---|---|
| iShares NASDAQ 100 (CNX1) | 140.72% | 3.37% | Invest with eToroCapital at risk |
 | Invesco NASDAQ 100 (EQSG) | N/A | 5.87% | Invest with IGCapital at risk |
 | Amundi NASDAQ 100 (ANXG) | 147.14% | 5.61% | Invest with IGCapital at risk |
| Lyxor NASDAQ 100 ETF (NASL) | 141.72% | 3.21% | Invest with IGCapital at risk |
 | Xtrackers NASDAQ 100 (XNAQ) | N/A | 3.46% | Invest with IGCapital at risk |
 | Fidelity NASDAQ Composite (FNCMX) | 96.87% | -9.55% | Invest with IGCapital at risk |
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.
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.
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
- Find an Dow Jones or NASDAQ ETF, index fund or mutual fund. Some index funds track the performance of all stocks on the index while others only track a certain number of stocks or are weighted more towards specific stocks. You should select the fund that best suits your investment goals.
- Open a share-trading account. To invest in the funds, you’ll need to open a trading account with a broker or platform. Keep in mind that some index funds may only be available on certain brokerages or platforms. The providers in our comparison table below let you invest in US shares. We’ve listed some index funds below that are listed on the London Stock Exchange (LSE).
- 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 for your pounds to be converted into US dollars.
- Buy the index fund. Once your money has been deposited, you can then buy the index fund. You’ll generally pay a small annual fee to invest in an ETF or index fund.
Best trading platform for index funds: Saxo
We chose Saxo as our top pick because of the following:- Invest in over 19,000 stocks, funds and investment trusts.
- Use its award-winning trading platforms.
- Customer support is 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.
Compare Dow Jones and NASDAQ trading platforms
Table: sorted by promoted deals first
These trading apps allow you to invest in companies within the indices directly or to invest in funds/ETFs.
Bottom line
NASDAQ is a stock exchange in the US, known for having a high proportion of technology stocks. A NASDAQ index is the NASDAQ Composite, which comprises most of the stocks on the NASDAQ stock exchange. The Dow Jones is an index of 30 US stocks — typically large companies. It’s hand-picked while the NASDAQ Composite includes all eligible stocks.
Frequently asked questions
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.
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