Nasdaq 100 InvestmentAn overview of the Nasdaq-100 index (NDX)
The Nasdaq-100 is one of the world’s preeminent large-cap growth indexes. It includes 100 of the largest domestic and international non-financial companies listed on the Nasdaq Stock Market based on market capitalization. It is home to the four companies who have touched the trillion-dollar mark in the US: Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), and Alphabet (GOOG, GOOGL).
The prominence of these companies along with other technology leaders such as Cisco (CSCO), Qualcomm (QCOM), Intel (INTC), NVIDIA (NVDA), Micron (MU), Adobe (ADBE), Advanced Micro Devices (AMD), and Baidu (BIDU) often create an impression of it as a technology index.
While technology is a dominant segment in the index, it is well-balanced by sectors such as consumer services, healthcare, consumer goods, and industrials which constitute the other 50%. Consumer services companies account for almost a quarter of the cap weight, up from 17% a decade ago.
Within healthcare, Nasdaq-100 is home to some of the most prominent biotechnology companies such as Gilead (GILD), Regeneron (REGN), Vertex (VRTX), and Amgen (AMGN). These companies are working on cutting edge research. Recently, Regeneron Pharmaceuticals announced important advances in novel COVID-19 antibody program while Gilead has initiated two Phase 3 clinical studies to evaluate the safety and efficacy of remdesivir (investigational nucleotide analog) in adults diagnosed with COVID-19. China’s health authorities have initiated two clinical trials in patients to determine remdesivir’s potential for treatment for the coronavirus.
If we look at current market trends, companies such as Zoom (ZM) are surging on the work-from-home model while others, such as American Airlines (AAL), and Expedia (EXPE), are struggling due to travel halt.
The index holds consumption-led companies such as Netflix (NFLX), Pepsi (PEP), Costco (COST), and Starbucks (SBUX), some of which are suffering due to supply chain bottlenecks and lockdowns while others are partial beneficiaries of the current chaos.
As we look at the larger picture, the NDX is a diversified mix of sound companies and is better positioned compared to the S&P 500 due to the negligible or complete absence of sectors such as energy and financials. One thing which is unique to this index is its focus on companies which are symbolic of innovation and future growth. Since 2008, the Nasdaq-100 has generated higher growth rates than competing indexes, such as S&P 500 Index and the Russell 1000 Growth Index.
