The NASDAQ-100 is a stock market index composed of 103 equity securities issued by the top 100 non-financial companies publicly-listed on the American stock exchange NASDAQ. Many major companies from several industry groups can be found on this index, including Apple, Alphabet (former Google), and eBay.
The NASDAQ 100 Index – Brief History
The NASDAQ 100 Index, commonly known as NDX in the derivative markets, was founded in January 1985 at the base price of 250. Initially, NASDAQ created two separate indices, the 100 one (Industrial, Technology, Retail, Telecommunication, Transportation, Media and Service companies, Healthcare and Biotechnology); and the NASDAQ Financial – 100 one, composed of insurance & mortgage firms, banking companies, as well as brokerage houses. In its current form, the index does not have any financial companies.
The Dot-com Bubble brought the index its first record in 2000, respectively a value above the 4,700 level. However, the latest record values of the index were reached in April 2019, with a closing value of 7,689.71 and an intra-day value of 7,715.07.
The main characteristics of the NASDAQ 100 Index
The NASDAQ 100 (^NDX) is a modified capitalization-weighted index formed of the most actively traded companies listed on the NASDAQ stock exchange. NASDAQ is the second largest stock exchange in the entire world by market capitalization, after the New York Stock Exchange (NYSE). The assets cover a series of business sectors, excluding financial services. The technology industry accounts for 54% of the index’s weight, followed by the consumer services one (retail, travel, restaurant chains), which accounts for almost a quarter of the index’s cap weight.
Apart from the market cap, to be included on the NASDAQ 100 Index, companies must be listed exclusively on the NASDAQ stock exchange; must have an average daily volume of 200,000 shares, and must be up-to-date with the quarterly and annual reports. The index is updated once a year, but there can be changes in case a company transfers to another exchange, goes in bankruptcy proceedings or fails to meet certain listing requirements. The index uses two major parameters to rank the companies: the share prices of the last trading day in October and the share totals of the last trading day of November.
The NASDAQ 100 Index is traded through the PowerShare QQQ Trust, commonly referred to by its nickname, “the que’s” – an exchange traded fund designed to track the price and performance of the underlying index. NASDAQ 100 and the Qs must not be confused with the NASDAQ Composite Index, which contains the stock of all companies listed on NASDAQ (over 3000).
After the latest update from March 18, 2019 – the top ten companies listed on the NASDAQ 100 Index are:
- Activision Blizzard (ATVI)
- Adobe Inc. (ADBE)
- Advanced Micro Devices (AMD)
- Alexion Pharmaceuticals (ALXN)
- Align Technology, Inc. (ALGN)
- Alphabet Inc. (GOOGL)
- Alphabet Inc. (GOOG)
- Amazon.com, Inc. (AMZN)
- American Airlines Group (AAL)
- Amgen Inc. (AMGN)
Apple, Costco, Intel and PACCAR have been NASDAQ 100 components ever since the index was formed. You can find the complete list and keep up with the updates on the official website of the NASDAQ stock exchange.
Why investing in the NASDAQ 100 Index is a good idea
In 2018, NASDAQ had a market cap of US$10 trillion! The NASDAQ 100 Index is compromised of the largest 100 listed companies, which means they are the best-performing and lucrative ones. Investing in this index can bring you high returns, but it isn’t a piece of cake.
First of all, you need to find a reliable online broker that gives you access to this market and offers you the appropriate platform, tools and overall environment to embark in such a major investment. TradeFW.com is a licensed and regulated investment firm, fully compliant with the Markets in Financial Instruments Directive (MiFID). It provides a secure trading environment, flexible payment methods, 3 account types for all levels of experience and a comprehensive amount of tools & informative materials. Moreover, you can trade with a high leverage ratio and the fees for investing in such a prestigious index are transparent and affordable. These are the best features of an online broker to start your investing journey.
You can buy individual stocks, invest in the Q’s, or invest in mutual funds. The third option allows you to invest in a group of stocks, rather than in just one. The most convenient sessions to invest in this Index are: the premarket session (4:00 AM – 9:30 AM), the active trading session (9:30 AM – 4:00 PM), and the postmarket session (4:00 PM – 8:00 PM). Make sure to approach a strategy and a trading plan that suits your level of experience, personality and financial goals.
The NASDAQ 100 Index tracks the largest 100 companies in terms of market cap, listed on the influential NASDAQ stock exchange. This index alone has a very important role to play in the global as well as the U.S. economy – since giants like Apple, Tesla, Facebook, and Netflix are part of it. Investing in it can be a life-changer and bring superb returns over time, but successful results can only be achieved through information, discipline and patience!