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.
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).
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 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.
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.
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.
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.
These trading apps allow you to invest in companies within the indices directly or to invest in funds/ETFs.
Here are some of the best-performing Dow Jones and NASDAQ funds according to justETF:
| Icon | Fund | 5-year performance (to February 2024) | 1-year performance (to February 2024) | Link to invest |
|---|---|---|---|---|
 | Lyxor Dow Jones Industrial Average (DJEL) | 68.82% | 10.45% | Capital at risk |
 | iShares Dow Jones industrial average (CIND) | 68.67% | 10.07% | Invest with eToroCapital at risk |
| Icon | Fund | 5-year performance (to February 2024) | 1-year performance (to February 2024) | Link to invest |
|---|---|---|---|---|
 | Amundi NASDAQ 100 (ANXG) | 164.88% | 35.86% | Capital at risk |
| Lyxor NASDAQ 100 ETF (NASL) | 163.76% | 35.78% | Capital at risk |
| iShares NASDAQ 100 (CNX1) | 161.79% | 35.15% | Invest with eToroCapital at risk |
 | Invesco NASDAQ 100 (EQSG) | N/A | 35.97% | Capital at risk |
 | Xtrackers NASDAQ 100 (XNAQ) | N/A | 35.27% | Capital 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.
| Dow Jones | NASDAQ | ||
|---|---|---|---|
 | Apple | | Apple |
 | Microsoft | | Microsoft |
 | Johnson & Johnson |  | Amazon |
 | UnitedHealth |  | Tesla |
 | Visa |  | NVIDIA |
Need to know: Opening a Saxo share dealing account requires a high minimum investment (£500).
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These trading apps allow you to invest in companies within the indices directly or to invest in funds/ETFs.
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.
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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