The NASDAQ Composite and NASDAQ 100 are both stock market indices, which means they\u2019re collections of stocks that are designed to reflect the performance of the market. In the UK we have the FTSE 100 and the FTSE 250, while the US has the Dow Jones, the S&P 500, the NASDAQ Composite and the NASDAQ 100, among others.<\/p>
You can invest in an index through an index fund, which is a fund that either holds the stocks in the index or holds stocks in an attempt to mirror the performance of the index \u2014 a good index fund has performance close to the index it\u2019s attempting to imitate.<\/p>
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.<\/p>
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.<\/p>
In order to be part of the NASDAQ 100 index, companies must:<\/p>
The companies in the top 100 of eligible companies, by market capitalisation, are part of the index. It is rebalanced annually, although there are some instances when it gets rebalanced earlier.<\/p>