Strategies for Smart Investments: Nasdaq Composite vs. Nasdaq-100

When investors talk about investing in the Nasdaq, it can have different meanings. For some, it means an involvement in the Nasdaq Composite, one of the three main indices of the US stock market, which includes nearly every stock listed on the Nasdaq exchange. Others focus on the Nasdaq-100, a specific segment of the Composite that comprises the 100 largest non-financial companies. Both options have their advantages, and the choice ultimately depends on individual preferences. While the Nasdaq Composite offers broad diversification with over 2,500 companies, the Nasdaq-100 concentrates on the largest and most well-known names on the exchange. A promising start to the new year for investors might be investing in an exchange-traded fund (ETF) like the Invesco QQQ Trust. This popular market ETF has long pursued a successful strategy and has achieved remarkable returns in recent years. The Invesco QQQ Trust is market-capitalization-weighted, meaning larger companies hold more significant shares in the fund than smaller ones. This structure has contributed to some mega-cap tech stocks being at the forefront. Although the top 10 companies make up more than 52% of the ETF, they offer impressive growth opportunities, driven by mega-trends such as artificial intelligence (AI), cloud computing, and electric vehicles (EV). It is fascinating how AI, although not a standalone industry, is transforming many sectors. Companies leading in areas such as graphics processors, data centers, and machine learning are at the forefront of this development. The cloud computing industry is still in a relatively early adoption stage, but Amazon, Microsoft, and Alphabet already dominate with market shares of 31%, 20%, and 11%, respectively. The global market for electric vehicles was estimated at just over $500 billion in 2023 and is expected to reach almost $1.9 trillion by 2032. Tesla, as the only EV manufacturer in the top 10, however, relies on other companies for hardware and software components. The Invesco QQQ Trust has achieved impressive milestones since its debut on the stock markets in March 1999. In the 25 years since its inception, it has generated a return of over 930%, outperforming both the S&P 500 and other indices. An investment of $1,000 at the time of its launch would have grown to more than $10,300.