DEFINITION of FTSE NASDAQ 500 Index
The FTSE NASDAQ 500 is one of four indexes in the FTSE NASDAQ Index series first introduced in July of 2005. It includes the 500 largest NASDAQ companies by market capitalization with an emphasis on technology stocks. The partnership between NASDAQ and the FTSE intended to create potential opportunities for future development of innovative products that leveraged different segments of the NASDAQ investment universe.
As of mid-2014 the index series, including the FTSE NASDAQ 500, were discontinued and no longer listed on an exchange.
BREAKING DOWN FTSE NASDAQ 500 Index
The FTSE NASDAQ 500 index is analogous to the S&P 500 but consists of the NASDAQ investment universe. Some of the top stocks tracked by the index include Microsoft (MSFT), Cisco (CSCO), Google (GOOGL), Apple (AAPL), and Intel (INTC). The index is free-float weighted and reviewed every year during the first week of December. When it was actively trading, investors could find the index under the symbol Q500. Other parts of the FTSE NASDAQ partnership included a large-cap, mid-cap, and small-cap index. The large-cap index consisted of the largest 70% of NASDAQ companies, while the mid-cap index included the next 20%, and the small-cap index the smallest 10% of companies.
Each index aimed to leverage the hallmarks of two leading financial services organizations in an innovative product. This involved FTSE's cutting-edge index design combined with NASDAQ's diverse market comprised of industry leading companies in technology, financial services, retail and all other sectors of the economy.
Even though the FTSE NASDAQ 500 index was discontinued, FTSE and NASDAQ continued to collaborate on innovative financial products. In 2008, the two leading brands introduced the FTSE NASDAQ Dubai UAE 20 Index, which consists of 20 stocks traded on the NASDAQ Dubai. The index has found limited success and now trades below its opening price of $4,300 in April 2008.
Historical Performance of the FTSE NASDAQ 500
The FTSE NASDAQ 500 index opened slightly below $5,500 and closed on July 2014 at about $11,700, representing a 114% increase from start to finish. Prior to listing, the FTSE NASDAQ index was found to outperform the comparable Russell Growth indexes for the previous two years. And for the first five years of the millennium, the small-cap version bested the S&P 500, Russell 2000, and other small-cap tracking indexes. Like most assets, though, the FTSE NASDAQ 500 hit an all-time low during the recession, when prices were cut in half from recent highs and dropped to $3,300.