What is the NASDAQ OMX 100 Index
The Nasdaq OMX 100 Index is a market-capitalization-weighted index made up of the 100 largest companies listed on the NASDAQ OMX group exchanges in the United States, Sweden, Denmark, Finland, and Iceland.
BREAKING DOWN NASDAQ OMX 100 Index
The Nasdaq OMX 100 Index tracks large growth stocks across a broad range of sectors, with the Nasdaq's emphasis on innovation, technology, growth and globalization. This index was introduced in March 2008. It is designed to be a global index and is disseminated in both dollars and euros. It is calculated in real time. Stocks listed on the exchange include Amazon, Apple, Cisco, Danske Bank and NVIDIA.
On Nasdaq’s website, the NASDAQ OMX Group Inc, which produces the OMX 100 Index, is described as a group that delivering services “over six continents, and with over 3,900 companies, it is number one in worldwide listings among major markets.” The company offers trading opportunities in the following markets: equities, derivatives, debt, commodities, structured products and ETFs.
Comparing and Contrasting Nasdaq and Other Indexes: Index Weighting
Different methodologies dictate the weighting scheme among market indexes. These include market-capitalization weighted indexes, equal-weighted indexes, price-weighted indexes, risk-weighted indexes and fundamentally-weighted indexes.
The Nasdaq OMX 100 is a market-capitalization weighted index. Market-capitalization-weighted indexes, also known as market cap- or cap-weighted indexes, weight by market value as measured by capitalization: the current security price multiplied by outstanding shares. Most equity indexes today are cap-weighted. Nasdaq market-cap exchanges include the Nasdaq Composite Index, which indexes the stock of every company on the Nasdaq exchange. The Nasdaq-500 tracks the largest 500 stocks on the Nasdaq. The Nasdaq-100 Index is a modified market-capitalization weighted index, made made up of 103 equity securities, and only includes non-financial companies listed on the Nasdaq.
In contrast, the NASDAQ-100 Equal Weighted Index (NDXE) is an equal-weighted index, which offers an alternative to the more common method, market-capitalization weighting. The NASDAQ-100 Equal Weighted Index comprises 100 of the largest, most actively traded, non-financial U.S. companies on the Nasdaq. Each of the securities is initially set at a weight of 1 percent: The equal weighting means that the index's smaller companies contribute as much as its larger companies. The index rebalances quarterly and the company list is updated annually in December.
The Dow Jones Industrial Average offers a prime example of an price-weighted index, which values each constituent stock in its basket based upon its price relative to other stocks. Price-weighted indexes are less common because a security’s price alone ignores supply and demand, those market forces that contribute more information about the value of a security.
Risk-weighted indexes weigh securites based on risk assessments: higher weight is assigned to those with low historical volatility. MSCI offers several risk-weighted indexes for investors.
Fundamentally weighted indexes, such as the FTSE RAFI US 1000 Index, weigh securities on accounting figures such as dividends, cash flow, sales, earnings and book value, to determine their financial health and corresponding worth.