What Are The Nasdaq Composite And Nasdaq 100 Indexes?

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The Nasdaq composite and Nasdaq 100 indexes explained: Via ForbesAdvisor

Over the past more than 10 years, the Nasdaq Composite has outperformed other stock market indexes. In fact, it’s beaten the S&P 500 in 11 out of the past 13 years. Its cumulative return for the period between Dec. 31, 2007, and Dec. 31, 2020, was 608%. For the same period, the S&P 500’s cumulative return was just 236%.

The Nasdaq 100 index uses what it calls a modified market cap weighting, although generally the largest component stocks have the biggest impact on the Nasdaq 100’s value. Nasdaq uses ato determine the index weighting, which primarily relies on market capitalization, plus certain other thresholds to prevent the largest stocks from having too great an impact on performance.

The weighting of companies included in the Nasdaq 100 is rebalanced once a quarter, in March, June, September and December. Companies that no longer meet the Nasdaq 100’s rules for inclusion are replaced with new firms once a year in the third week of December.Like the Nasdaq Composite, the Nasdaq 100 has outperformed many other leading indexes in recent years.

The Invesco QQQ fund is a straightforward passive tracking ETF that attempts to duplicate the performance of the Nasdaq 100 as closely as possible. As of July 2021, it had over $180 billion in assets under management.

 

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