NASDAQ Index Blog - Posts with tag of "NASDAQ-100"

First Australian ETF Linked to Nasdaq Index Launches Updated: 5/27/2015



 

On May 27, 2015, the BetaShares Nasdaq 100 ETF began trading on the Australian Securities Exchange (ASX: NDQ). This is the first time that Australian investors have access to this prominent benchmark.

Rob Hughes, Vice President, Head of Index & Advisor Solutions at Nasdaq said: “We’re excited to partner with BetaShares on the first Nasdaq ETF to list in Australia. This exposes Australian investors to 100 of the world’s most dynamic companies, and is another milestone in the international expansion of investment products linked to Nasdaq indexes.”

International equities continue to be attractive to local ETF investors, and the new fund broadens the offerings available for investors looking for straightforward exposure to those securities.
The Nasdaq-100 Index includes the 100 largest, non-financial companies listed on the Nasdaq Stock Market and acts as a leading barometer for strong, growth companies at the forefront of innovation.
 

White Paper: Nasdaq-100 Turns 30 Updated: 2/12/2015

How well do you know the Nasdaq-100? With exchange-traded products tied to the index exceeding $50 billion, the Nasdaq-100 is one of the most widely tracked indexes in the world. Our white paper discusses topics such as how the NDX has changed over the last 30 years, how it compares to other broad benchmarks currently and historically, and the state of tradable products tied to the index.

Replay our web seminar on the Nasdaq-100's 30th Anniversary


Download the white paper on NDX with the form below:

The Nasdaq-100 Index Celebrates 30 Years of Growth & Ambition Updated: 2/4/2015

 

In 1985, Nasdaq launched the Nasdaq-100 Index® (NDX®) to track the 100 largest, non-financial companies listed on The Nasdaq Stock Market. In addition to being a barometer for the investment community on how major sectors of the market are performing, the Index also plays an important role as the basis for investible products. Today, the NDX is one of the world’s most widely followed stock indexes, with more than $50 billion in exchange-traded products tied to the Index, including the well-known PowerShares QQQ Trust® ETF (QQQ) or, simply, “the Q’s.”
At the time of launch, Nasdaq was still in its infancy (just 14 years old) and indexing was completely new territory. Since launch, the market cap of Nasdaq-100 companies has grown from $58 billion to more than $4.7 trillion today. Now, hundreds of products, including ETFs, Mutual Funds, Futures, Options and other derivatives, are tied to the index in 29 countries. While always solidly tilted to the technology sector, the NDX has evolved to include some of the top names in biotech, retail, media and industrials and is cited as a benchmark for large-cap growth performance.

 

In recognition of the 30th anniversary of the Nasdaq-100 Index, Nasdaq Global Indexes will be publishing a white paper, providing a comprehensive overview of the evolution of the index. The research piece details the lifespan of NDX including those companies that have been in since inception; the nuances of the index vs. its competitors; reasoning behind rebalances and more. We’ll send out an update when the paper is available for download.


In addition, join us for the Web Seminar: The Nasdaq-100 Turns 30: Tracking Innovation in Large Cap Growth on Tuesday, February 10th at 10 am EST.


Special Note: Bloomberg will be recording their ‘Taking Stock’ radio show live from the Nasdaq MarketSite on February 9th to cover this milestone. The line-up of guest speakers includes Q’s pioneers John Jacobs, Ben Fulton and Eric Noll; along with present-day managers Rob Hughes, Vice President Nasdaq Global Indexes, and Dan Draper, Managing Director, Invesco PowerShares. They will also be joined by Debbie Fuhr, respected founder of ETFGI, an independent research and consultancy firm.

Listen live on Monday, February 9th from 2pm -5pm Eastern Time.

 

Web Seminar Replay: The Nasdaq-100 Turns 30: Tracking Innovation in Large Cap Growth Updated: 1/23/2015

How well do you know the Nasdaq-100? With exchange-traded products tied to the index exceeding $50 billion, the Nasdaq-100 is one of the most widely tracked indexes in the world.

Our discussion addressed topics from our soon-to-be published white paper, such as how the NDX has changed over the last 30 years, how it compares to other broad benchmarks currently and historically, and the state of tradable products tied to the index.

Join John L. Jacobs, Senior Advisor, Nasdaq Global Information Services; Efram Slen, Research & Product Development Specialist, Nasdaq Global Indexes and Jeff Smith, Associate Vice President, Economic and Statistical Research, Nasdaq, for a 60-minute web seminar replay.

 

Watch the Replay here.

 

Covered Call Strategy ETFs By: Dave Gedeon
on 1/22/2014

The CBOE NASDAQ-100 BuyWrite Index (BXN) is the basis of the Recon Capital NASDAQ-100 Covered Call ETF (QYLD), which launched in December 2013. This exchange-traded fund (ETF) is the latest addition to a small, recent wave of covered-call ETFs and NASDAQ’s third in this category.

The CBOE NASDAQ-100 BuyWrite Index (BXN) measures the total return of a portfolio consisting of common stocks of the 100 companies included in the NASDAQ-100 Index and call options systematically written on those securities through a “buy-write” (or covered call) strategy. A “buy-write” strategy is an investment strategy in which the Fund buys a specific basket of stocks (such as the NASDAQ-100® Index) and sells covered call options that correspond to that basket of stocks.

“This type of product is growing more and more in popularity as investors seek ways to get an extra boost of income during this uncertain time in the market,” said Dave Gedeon, Managing Director, NASDAQ OMX Global Indexes.
“Covered calls are proliferating as they offer lower market volatility, produce income, are less expensive, and provide more liquidity than options alone. They also provide market participation in flat to slightly up/down markets making them a superior investment strategy.”

In 2013, NASDAQ launched the Credit Suisse NASDAQ Silver FLOWS 106 Index ER (QSLV) and the Credit Suisse NASDAQ Gold FLOWS103 Price Index (QGLDI).

“The buywrite strategy is the quintessential low-vol strategy where you’re buying the index and riding a call against that,” said Robert Hughes, Vice President, NASDAQ OMX Global Indexes. “Advisors today are looking at traditional low volatility, income-producing strategies, options strategies, such as covered calls/buywrites. Now NASDAQ is providing this all in one ETF. It’s much easier for FAs to sell that to a client than to have to explain how to buy/sell options, plus there’s much more liquidity in this type of strategy.”
 

 

Picking the Right Index By: John Jacobs
on 1/13/2014

Stepping up to the plate to take your first swing at ETF investing has never been simpler and more cost effective, but as eager investors approach these products, are the really understanding the differences in in portfolio composition? Index formulation methodology could likely have a much greater impact on bottom-line performance than fee structure over time. Now that we have a fair amount of price history for comparative analysis, the differences in index construction can amount to a sizeable margin of total return over time.

This is precisely why many exchange-traded product providers are setting their sights on challenging the traditional cap-weighted styles for more exotic, alternative, or smart index strategies. However, these innovative strategies still have a big hill to climb, as cap-weighted indexes still control the largest share of assets under management in the ETF universe.

There is no hard and fast rule to index selection, which is why investors need to be more conscious than ever about the options that are available and how to ultimately select an appropriate fund.

The Basics
There are three primary index construction techniques that publishers use to construct the allocation size in an equity-oriented ETF: market capitalization weight, equal weight, and fundamental weight.

Let’s begin with the index blueprint that most investors are familiar with: market-cap weighting sizes constituent securities according to the total market value of their outstanding shares. In a real world example, examining the PowerShares NASDAQ 100 ETF (QQQ), Apple Inc. (AAPL) occupies roughly 12.5% of the fund due to its $500 billion market cap. On the flip side, the smallest holding, F5 Networks (FFIV), only occupies 0.17% due to its much smaller $7 billion market cap.

Quite simply, a cap-weighted index will advance or decline more dramatically in value in response to the changes in market value of larger holdings vs. smaller holdings. One inherent benefit to this style of index composition is that traditionally larger, more established companies will present less volatility than smaller ones.

However, it’s also important to bear in mind that investors who select cap-weighted indexes are essentially disproportionately tilting their equity allocations toward larger companies that can inhibit performance characteristics over the long term. In a recent study by Goldman Sachs Asset Management that examined the stock market over the past 20 years, it was proven that small and mid-cap stocks have outperformed large cap stocks by a fair margin while presenting only slightly higher volatility.**

Using the same scenario, equal weight indexes are often created using the same list of stocks as cap-weighted indexes. However, instead of examining the size of the company, an equal weight index allocates identical proportion amongst all the constituent securities. So, Apple Inc. would carry an identical weight within the index as F5 Networks, which is the goal behind the NASDAQ-100 Equal Weighted Index. At first glance, this type of weighting strategy might seem illogical in relation to the aforementioned cap weighted style, as investors may instinctively want to own a larger share of mature, successful companies. But, it can often be prudent to carry a larger slice of the pie in small and medium capitalization companies in a rising market environment.

Using a relevant 2013 performance comparison, the cap-weighted SPDR S&P 500 ETF (SPY) has gained 28.97%, while the Guggenheim Equal Weight S&P 500 ETF (RSP) is up 31.74%, a divergence of 2.77%. In comparison, RSP carries an expense ratio nearly four times higher than SPY at 0.40%, making for a compelling value proposition even in light of a higher fee structure. Investors should also be mindful that a larger portion of their invested capital is allocated to companies that are smaller in size, which has been known to exhibit higher beta over time.

Relatively new when compared to the other two strategies, the last type of index methodology is a fundamentally weighted group of stocks. These indexes are developed to account for comparable company metrics such as book value, earnings, revenue, or even dividend rates. Companies exhibiting the strongest traits based upon the screening methodology are then assigned the largest weight within the index.

The beauty of fundamentally allocating to companies using performance based metrics is the ability to overweight a company that is currently undervalued by the market, and vice-versa for overvalued examples. It also gives investors the ability to zero in on a specific metric, such as free cash flow, and apply that metric across a single sector. A striking example illustrating the effectiveness of fundamentally weighted strategies could be made using the First Trust Consumer Staples AlphaDex ETF (FXG) and the SPDR Consumer Staples ETF (XLP). FXG is currently up 39.83% year-to-date, while XLP has risen 25.44% through the same time frame, totaling a staggering divergence of 14.39%.

Selection and Application
Choosing the right index for your personal needs doesn't come down to typical investment roadblocks such as size or accessibility, but rather your individual goals and tolerance for volatility. In other words, investors have become accustomed to traditional market-cap weighted indexes due to their long running history. This is precisely why you should ask yourself whether you feel comfortable stepping outside the classical approach to index investing. In reality, you could conceivably pay a higher fee in order to gain the potential reward that the index you choose hits the market's sweet spot.

As demand evolves for more complicated and specific benchmarks, index construction is growing far more complex. Regardless of strategy, it is imperative that investors demand that index providers bring the highest quality, objective, transparent and rules-based indexes to the market. Indexers must ensure that they have the best available data and technology to match the growing complexities, and methodologies must remain open and transparent to allow for optimal tracking by investors, product issuers and traders.

The overarching conclusion that can be drawn from the differences between these three strategies is the universal shift from overweight positions in large well-known names to concentrated positions in smaller, more nimble, or fundamentally sound companies. These traits should immediately appeal to those investors seeking the chance to outperform traditional benchmark indexes, but it will likely come with the cost of increased volatility over time.

Conversely, cap weighted indexes might still be the right fit for investors who believe in the strength of large companies to dominate a specific segment of the market, and don't want to risk the chances of underperforming traditional market barometers. Undoubtedly, the market for alternative index strategies is growing and attracting assets. Educating yourself on the intricacies of these new products and their potential benefits will ultimately strengthen your investment selection process. Performing your own due diligence alongside your individual goals should lead you down the path of picking the appropriate index that meets your unique investment needs.
*Performance data provided by Yahoo! Finance Through November 30th, 2013

*Goldman Sachs Asset Management White Paper “The Case for Mid-Cap Investing” June 2013, p. 2

Published in Forbes.com January 9, 2014

Annual Changes to the NASDAQ-100 Index Updated: 12/13/2013

The annual re-ranking of The NASDAQ-100 Index, composed of the 100 largest non-financial stocks listed on The NASDAQ Stock Market®, occurs this month.

Effective prior to market open on Monday, December 23, 2013, the following five securities will be added to the Index: DISH Network Corporation (NASDAQ: DISH), Illumina, Inc. (NASDAQ: ILMN), NXP Semiconductors N.V. (NASDAQ: NXPI), TripAdvisor, Inc. (NASDAQ: TRIP) and Tractor Supply Company (NASDAQ: TSCO).

“The NASDAQ-100 Index is a globally recognized brand that includes 100 of the world’s most dynamic non-financial stocks listed on The NASDAQ Stock Market," said NASDAQ OMX Executive Vice President John L. Jacobs. "The objective, transparent re-ranking process ensures that the NASDAQ-100 remains a relevant investable index that is the underlying benchmark for approximately 7,200 products in 23 countries with a notional value of approximately $1 trillion.”

The NASDAQ-100 Index dates to January 1985 when it was launched along with the NASDAQ Financial-100 Indexâ, which is comprised of the 100 largest financial stocks on NASDAQâ. These indexes act as benchmarks for investment products such as options, futures, and funds. The NASDAQ-100 is re-ranked each year in December, timed to coincide with the quadruple witching expiration Friday of the quarter.

On a cumulative price return basis, the NASDAQ-100 Index has returned almost 2800% since inception, although past performance is not indicative of future performance.

The NASDAQ-100 Index is the basis of the PowerShares QQQ Trust (NASDAQ: QQQ), which aims to provide investment results that, before expenses, correspond with the NASDAQ-100 Index performance. In addition, options, futures and structured products based on the NASDAQ-100 Index and the PowerShares QQQ Trust trade on various exchanges.

As a result of the re-ranking, the following five securities will be removed from the Index: Fossil Group, Inc. (NASDAQ: FOSL), Microchip Technology Incorporated (NASDAQ: MCHP), Nuance Communications, Inc. (NASDAQ: NUAN), Sears Holdings Corporation (NASDAQ: SHLD) and DENTSPLY International Inc. (NASDAQ: XRAY).

Read more about NDX-100.  

  

 New Names in the NDX-100 Updated: 7/15/2013

Recent changes have occurred to the NASDAQ-100 Index. We are excited to welcome the following companies into this well-known large cap index:

  • 6/5/13 Liberty Media Corporation (LMCA) replaced Virgin Media Inc. (VMED)
  • 6/6/13 Netflix Inc. (NFLX) replaced Perrigo Company (PRGO)
  • 7/15/13 Tesla Motors, Inc. (TSLA) replaced Oracle Corporation (ORCL)
  • 7/25/13 Charter Communications, Inc. (CHTR) replaced BMC Software (BMC)

 

Low Volatility Is Still In High Demand - Commentary Updated: 6/12/2013

By: David Fabian, Special NASDAQ OMX Global Index Watch Contributor

The first low volatility exchange-traded fund was released in 2011 as the PowerShares S&P 500 Low Volatility Portfolio (SPLV). This ETF quickly garnered billions of dollars in assets as investors sought to diversify their portfolios with a unique equity index strategy that is designed to select stocks with lower price fluctuations. The success of this product quickly led to additional offerings from both PowerShares and iShares in emerging market, international, global, and small/mid-cap stocks.  

The basis behind the strategy for these funds is to take the underlying S&P or MSCI indexes and identify a subset of stocks (typically 80-200) that have the lowest price volatility for the last quarter. What you are left with is a unique portfolio of equities that typically have very steady returns and stable price movement. The make-up of low volatility funds is commonly focused in the areas of consumer staples, utilities, financial, and health care sectors. One additional benefit to a concentrated mix of stocks in these defensive sectors is the above average yield. However, the asset allocation can vary depending on the region or market capitalization of the underlying index.

Read the entire article here.

Changes to the NDX-100 Updated: 6/6/2013

As of June 5th, 2013, Liberty Media Corporation (LMCA) became a component of the NASDAQ-100 Index® (NDX), the NASDAQ-100 Equal Weighted Index (NDXE) and the NASDAQ-100 Ex-Technology Sector Index (NDXX). Liberty Media Corporation, which replaces Virgin Media, Inc. (VMED)is headquartered in Englewood, CO, and has a market capitalization of approximately $12.7B.In addition, Netflix (NFLX) will replace Perrigo Company (PRGO)
 

China's 1st Cross-Border Exchange-Traded Fund Launches By: Rob Hughes
on 5/15/2013

The very first cross-border exchange-traded fund (ETF) in China launched on May 15. The ETF will be based on the NASDAQ-100 Index, providing Chinese investors access to 100 of the world's largest and most dynamic non-financial companies, based on market cap.

This is a significant milestone both for the growing global ETF landscape and for the increasing diversification of China's capital markets. The China Securities Regulatory Commission, the Shanghai Stock Exchange and Guotai Asset Management have paved the way for individual and institutional investors in China to trade an innovative investment solution that has not been previously available.

The Guotai NASDAQ-100 Exchange Traded Fund is listed on the Shanghai Stock Exchange.

We couldn't be more pleased with this development as a testament to NASDAQ OMX's prominence in the region. Read the press release, or visit our website to view the NASDAQ-100's performance history.

NASDAQ® and NASDAQ® are registered trademarks of The NASDAQ Group, Inc. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Neither The NASDAQ Group, Inc. nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding NASDAQ-listed companies or NASDAQ proprietary indexes are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.

© 2015. The NASDAQ Group, Inc. All Rights Reserved.

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