1. Index Investing: Introduction
  2. Index Investing: What Is An Index?
  3. Index Investing: The Dow Jones Industrial Average
  4. Index Investing: The Standard & Poor's 500 Index
  5. Index Investing: The Nasdaq Composite Index
  6. Index Investing: The Wilshire 5000 Total Market Index
  7. Index Investing: The Russell 2000 Index
  8. Index Investing: Other Indexes
  9. Index Investing: Index Funds
  10. Index Investing: Conclusion


The Nasdaq Composite Index represents all the stocks that trade on the Nasdaq stock market. The recent surge in popularity of technological stocks has launched the Nasdaq into the spotlight. Consequently, the composite index has become one of the premier indexes in the world.

Don't confuse the Nasdaq composite with the Nasdaq 100, which is made up of the 100 largest non-financial companies on the Nasdaq stock market.

Created By: The NASD in 1971
Number of Companies: 3,000+
Types of Companies: Contains all of the companies that trade on the Nasdaq. Most are technology and Internet-related, but there are financial, consumer, bio-tech and industrial companies as well.
Selection Criteria: If a stock trades on the Nasdaq, it is included in the index. With certain restrictions on security types such as close-end funds, preferred stocks, rights, warrants, convertible debentures
How it\'s Calculated: The Nasdaq Composite is a capitalization-weighted index, with each company weighting being proportionate to its market value.

Advantages: The Nasdaq Composite is heavily weighted in technology and Internet stocks. As such, the companies listed in the Composite are considered to have high growth potential.
Disadvantages: Companies on the Nasdaq tend to be more speculative and risky than those listed on the New York Stock Exchange (NYSE). Because of this, the Nasdaq composite index is much more volatile than other broad indexes. The advantage of being mostly tech can also be a disadvantage. That is, when tech suffers, so does this index.
Investing: There are several index funds that track the Nasdaq composite such as the Fidelity Nasdaq Composite Index Fund. The QQQQ, formerly known as the QQQ, is the Exchange-Traded Fund (ETF) that tracks the Nasdaq 100.

Index Investing: The Wilshire 5000 Total Market Index
Related Articles
  1. Insights

    How Nasdaq Makes Money

    NASDAQ provides a marketplace which offers money-making opportunities to investors. Investopedia explains how NASDAQ makes money.
  2. Insights

    Understanding NASDAQ

    NASDAQ is an acronym that stands for the National Association of Securities Dealers Automated Quotation system.
  3. Investing

    How Nasdaq Continues To Innovate

    For centuries, a stock market was a physical arena where buyers and sellers traded shares. Then the NASDAQ opened and changed everything.
  4. Investing

    The Top 4 ETFs to Track the Nasdaq in 2017

    Investors seeking exposure to the tech sector may want to check out these Nasdaq ETFs.
  5. Investing

    Why Do Companies Choose NASDAQ for Their IPO?

    The NYSE is known for its prestige so why do some companies opt to list on the NASDAQ instead?
  6. Financial Advisor

    3 Fidelity Funds Rated 5 Stars by Morningstar

    Discover three Fidelity mutual funds that have received five-star overall ratings from Morningstar.
  7. Financial Advisor

    Is Your Investment Manager Skilled Or Lucky?

    Being familiar with composite presentations will help you better assess the quality of an investment manager's performance.
  8. Insights

    An Introduction to Stock Market Indices

    Investopedia explains the five most talked about indices and what makes them all different.
  9. Insights

    What's The Difference Between The Dow And The Nasdaq?

    The way people throw around the words “Dow” and “Nasdaq” makes them seem synonymous with “the market.” But there are important differences.
  10. Investing

    The 2000 Nasdaq vs. The 2015 Shanghai Composite: How History Repeats Itself

    The Shanghai Composite is in a correction, and it's very similar to the NASDAQ of 2000.
Frequently Asked Questions
  1. What are Common Examples of Monopolistic Markets?

    Discover what causes real instances of market monopoly, how it persists and where monopoly privilege is most common in the ...
  2. What is the gold standard?

    The gold standard is a monetary system where a country's currency or paper money has a value directly linked to gold, but ...
  3. What's the most expensive stock of all time?

    The most expensive publicly traded stock of all time is Warren Buffett’s Berkshire Hathaway.
  4. What is a "socially responsible" mutual fund?

    As the name suggests, socially responsible mutual funds invest exclusively in socially responsible investments.
Trading Center