How to start investing in NASDAQ100 (US Nasdaq Composite Index) online?

By opening an account with ExnessOpen EXNESS Real Account, you can start investing in NASDAQ100 (US Nasdaq Composite Index) online any time and anywhere.

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In this article, we will introduce you the important facts and characteristics of NASDAQ100 (US Nasdaq Composite Index).

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What is NASDAQ100?

The NASDAQ 100 is one of the largest indexes in the United States and is made up of 102 of the most liquid companies listed on the NASDAQ Exchange, the second-largest automatic stock exchange in the United States. For this reason, this index is the most commonly used benchmark for US technology funds.

Whether or not it will be adopted by NASDAQ100 depends on market capitalization and stock price, so it is indirectly up to the investor to decide. This index is based on a modified capitalist approach that uses individual weights for its components. Weights are set according to the market capitalization of each company and have constraints that limit the influence of the largest index constituents.

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History of NASDAQ100

NASDAQ (National Association of Securities Dealers Automated Quotation) was established in 1971 by requesting the SEC (Securities and Exchange Commission) regulated by the US Parliament.

On February 5, 1971, NASDAQ released the NASDAQ Composite Index, which consists of approximately 5,000 shares listed on the NASDAQ Stock Exchange. On January 31, 1985, NASDAQ released the NASDAQ100 Index, which includes technology, telecommunications, biotechnology, transportation, and media companies. The closing price on the first day of the index was 132.29 points. On the same day, NASDAQ announced the NASDAQ Financial-100, the second index dedicated to the banking sector.

In addition, the NASDAQ Stock Exchange has split the NASDAQ100 into two different sub-indexes: NASDAQ-100 Tech, which focuses solely on the technology sector, and NASDAQ100 Ex-Tech, which includes companies outside the technology sector. The latter index includes retail and distribution companies such as eBay and Amazon.

Since its inception, NASDAQ100 has been attended by more than 467 companies. Among the companies that made up this index when it was founded, there are companies such as Costco, Intel, and Apple that are still included in this index (July 2021).

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NASDAQ selection criteria

The constituent companies are reviewed at least once a year. All changes will be notified at least 5 business days in advance.

To participate in the index, you must have a daily trading volume of 200,000 shares or more and be listed exclusively on NASDAQ’s Global Market or Global Select Tier.

You also need to be able to trade in existing US markets for at least three months, not in bankruptcy proceedings, and have updated quarterly and annual reports. Also, if the index weight is not more than one tenth for two consecutive months, the company will be excluded from the index.

In 2014, NASDAQ allowed companies with multiple classes of equities to include all of them in the index structure. Therefore, if you look at the list of companies that make up the index, you may see duplicate company names.

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Historical record of NASDAQ 100

Like any other index, the NASDAQ 100 fluctuates, recording highs and lows.

The index exceeded 4,700 for the first time in 2000 as a result of the IT boom. It fell by 78% when the stock market plunged in 2002.

In 2020, the coronavirus pandemic brought a turning point in all stock markets. On April 3, 2020, the index fell below 7,000 points.

On July 26, 2021, a few days after most of the tech companies in the group announced their financial results, the US index reached a record high of 15,125.95 points.

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