The Nasdaq-100 Index is a prominent stock market index that comprises 100 of the largest non-financial companies listed on the Nasdaq Stock Market. Established in 1985, this index serves as a benchmark for investors, reflecting the performance of major industries such as technology, consumer services, and healthcare. Unlike the broader Nasdaq Composite Index, which includes all Nasdaq-listed companies, the Nasdaq-100 focuses exclusively on a select group of large-cap firms, excluding financial institutions.
Composition and Sectors
The Nasdaq-100 is heavily weighted towards the technology sector, with companies like Apple, Microsoft, and NVIDIA representing significant portions of the index. However, it also includes firms from other sectors such as consumer discretionary (e.g., Amazon), communication services (e.g., Alphabet), and healthcare (e.g., Amgen). This diversification allows the index to capture a broad spectrum of industries while maintaining a focus on innovation-driven companies.
Top Companies in the Nasdaq-100
As of April 2025, the top constituents of the Nasdaq-100 by market capitalization include:
- Apple Inc. (AAPL)
- Microsoft Corporation (MSFT)
- NVIDIA Corporation (NVDA)
- com, Inc. (AMZN)
- Alphabet Inc. (GOOGL)
These companies are leaders in their respective fields and significantly influence the overall performance of the index.
Nasdaq-100 vs. Nasdaq Composite
While both indices are associated with the Nasdaq Stock Market, they differ in scope and composition:
- Nasdaq Composite Index: Encompasses all domestic and international companies listed on the Nasdaq, totaling over 3,000 firms.
- Nasdaq-100 Index: Includes 100 of the largest non-financial companies listed on the Nasdaq, focusing on large-cap firms and excluding financial institutions.
This distinction makes the Nasdaq-100 more concentrated, with a significant emphasis on technology and growth-oriented companies.
Index Weighting and Rebalancing
The Nasdaq-100 employs a modified market capitalization-weighted methodology. This approach assigns weights to companies based on their market capitalization, with adjustments to prevent excessive concentration of any single stock. The index undergoes quarterly rebalancing to ensure alignment with its established criteria and to reflect changes in the market landscape.
Performance and Investment Appeal
Historically, the Nasdaq-100 has demonstrated robust performance, often outperforming other major indices like the S&P 500. This strong performance is largely attributed to its concentration in high-growth sectors, particularly technology. Investors seeking exposure to innovative and rapidly expanding companies often consider the Nasdaq-100 an attractive option.
How To Invest In US Stocks From India – Accessing the Nasdaq-100
For Indian investors wondering how to invest in US stocks from India, the Nasdaq-100 offers a compelling opportunity. Here are a few popular methods to invest in US stocks from India, specifically in the Nasdaq-100:
- Exchange-Traded Funds (ETFs): Funds like the Invesco NASDAQ 100 ETF (QQQM) aim to replicate the performance of the Nasdaq-100 by holding the same constituents as the index. These ETFs can be accessed via international brokerage platforms or select Indian platforms offering global investment options.
- International Mutual Funds: Some Indian mutual fund houses offer feeder funds that invest in US-based funds tracking the Nasdaq-100, allowing investors to participate in US markets using INR.
- Direct Investments via Global Brokerage Accounts: Several Indian fintech companies and banks provide platforms for Indians to directly invest in US stocks and ETFs. This is another effective route for those looking to invest in US stocks from India.
Considerations and Risks
While the Nasdaq-100 offers potential for significant returns, it is essential to consider associated risks:
- Sector Concentration: The index’s heavy weighting towards technology companies can lead to increased volatility, especially during sector-specific downturns.
- Market Fluctuations: As with all equity investments, the Nasdaq-100 is subject to market risks, including economic downturns and geopolitical events that can impact overall performance.
Investors should assess their risk tolerance and investment objectives before allocating funds to instruments tracking the Nasdaq-100.
Conclusion
The Nasdaq-100 Index serves as a vital barometer of the performance of large-cap, non-financial companies listed on the Nasdaq Stock Market. Its focus on innovation-driven firms across various sectors, particularly technology, has made it a popular choice among investors seeking growth opportunities.
For Indian investors exploring how to invest in US stocks from India, the Nasdaq-100 represents a strong option due to its historical performance and exposure to some of the world’s most influential companies. However, potential investors should be mindful of the index’s sector concentration and inherent market risks. By understanding the composition, performance, and investment avenues related to the Nasdaq-100, investors can make informed decisions aligned with their financial goals.
