The Evolution to Energy Investor Selection Worldwide

The Nasdaq-100® (NDX®) is a globally acknowledged index of 100 of probably the most revolutionary giant cap firms listed on the Nasdaq Inventory Market®. Originating in 1985 and lately celebrating 40 years as a number one US giant cap fairness index, NDX has developed past its core identification as a benchmark for lots of the world’s most revolutionary firms; it has turn out to be the inspiration for a posh and sturdy ecosystem of funding autos and devices. This growth displays the transformation of the index from its preliminary help of rising expertise firms right into a diversified benchmark consultant of the twenty first century world economic system.

At the moment – after a number of many years of product innovation and index constituent progress to help AUM – the Ecosystem is primarily pushed by the next six product varieties:

• Index-Based mostly Benchmarking

• Change Traded Merchandise

• Mutual Funds

• Derivatives

• Insurance coverage

• Structured Notes

Utilizing the 6 key monetary merchandise by means of which the markets work together with the Nasdaq-100, we study the relative sizes of every of the merchandise. Though dimension is expressed by means of totally different nomenclatures throughout every product (instance: Contract Open Curiosity for Derivatives, Property Underneath Administration for ETFs, and so forth.), these metrics had been normalized by analyzing notional worth of every product all through 2025. Notional worth displays the leverage of derivatives by contemplating the underlying belongings that decide their funds. For the cash-secured merchandise, AUM was decided to be an correct measure of notional worth.

Determine 1: Common 2025 Market Measurement (Notional Worth) Throughout International NDX Merchandise ($s)

^{Supply: Nasdaq, CME, OCC, Factset, Bloomberg, Morningstar. ETF and Mutual Fund sizes are reflective of the Property Underneath Administration linked or benchmarked to NDX. ETF and Mutual Fund sizes reflective of common AUM throughout 2025. Structured Notice and Insurance coverage sizes reflective of whole capital invested in dwell transactions as of 12/31/2025. Derivatives sizes reflective of common whole notional open curiosity throughout 2025. Whole NDX dimension information acknowledged in trillions rounded to 1 decimal level, XND Flex Possibility Measurement acknowledged in billions rounded to 2 decimal factors, XND Listed Possibility Measurement acknowledged in billions rounded to 1 decimal level, and all others acknowledged in billions rounded to the closest complete quantity.}

At a excessive stage, 46% of the $1.41 trillion in whole Nasdaq-100 notional worth recognized in 2025 was held in derivatives, whereas 42% was in ETFs. Between 2024 and 2025, over $350 billion of Nasdaq-100 notional worth was added throughout the measured ecosystem. In comparison with the broader US markets, there are two types of investor choice that proceed to be expressed within the ecosystem:

1. Deal with passive long-only publicity monitoring the efficiency of NDX.

With its above-average annualized returns and deal with Nasdaq-listed firms, market contributors sometimes view NDX as a differentiator fairly than as a barometer for the US Fairness Markets (because the S&P 500 is extra generally seen). Consequently, fund managers have hardly ever (if ever) benchmarked themselves in opposition to NDX, and long-only traders have primarily chosen direct passive publicity to NDX. That is mirrored by means of the prominence of QQQ and QQQM, which mixed make up almost 70% of whole ETF market capitalization; solely a small fraction might be thought of actively-managed, within the case of sure NDX Choices Overlay ETFs.

 2. Tailor-made publicity centered on beta over alpha.

Buyers in search of tailor-made publicity to NDX as a result of its notion as a “differentiated” product sometimes deal with danger administration and transformation in line with particular portfolio objectives, versus alpha era by way of energetic risk-taking vs. a benchmark. These wants are met throughout a variety of merchandise, from the ~$650bn listed and flex derivatives market, to the “secured” selection introduced by means of the ~$200bn marketplace for structured notes, insurance coverage, and leveraged/inverse/choices ETFs. Mixed, these risk-oriented options make up roughly 59% of the belongings monitoring NDX.

Altogether, the mixture of passive and energetic methods has created a dynamic and resilient NDX funding panorama, enabling traders to pursue a broad vary of funding goals with flexibility.

Zooming in on the expansion of NDX previously 15 years, it is usually vital to know how the US giant cap fairness markets have developed throughout this era. The equities contributing most to market progress have primarily been NDX constituents; all seven of the “Magnificent 7” companiesi are Nasdaq-listed and included in NDX. Though giant cap shares are sometimes characterised as firms with a market capitalization larger than $10 billion as of 2025, this static metric doesn’t consider the expansion the US fairness markets have seen throughout this era.

A extra dynamic technique of defining giant cap shares is by measuring the common market cap of the underside fifth percentile of shares within the Nasdaq US Massive Cap™ Index (NQUSL™) on the finish of every 12 months. NQUSL represents the massive cap portion of the Nasdaq US Benchmark™ Index (NQUSB™) and contains equities ranked inside the prime 75% of market capitalization for that index. Utilizing this technique, the massive cap threshold has grown from $4.2bn in 2011 to $22.9bn in 2025 — a rise of over 5 occasions. The chart under reveals how the smallest firms current in NDX and the S&P 500 (SPX) measure up in opposition to a dynamic threshold for big cap:

Determine 2: NDX and SPX Minimal Market Cap in opposition to Dynamic Massive Cap Threshold

^{Supply: Nasdaq, Factset, Bloomberg. All information is as of the tip of every 12 months and between 12/31/2011 and 12/31/2025.}

Whereas almost all of NDX has saved up with this improve, SPX features a important variety of constituents with market capitalizations under the edge, leading to notable mid cap publicity inside the index. Provided that NDX constituents have extra constantly tracked the edge for big cap inclusion, the 100-constituent make-up of the index throughout almost all sectors serves as a steadiness between diversification and undiluted giant cap publicity. This helps the rising view of the Nasdaq-100 Index® as a more true giant cap index and reinforces its standing because the “Benchmark of the twenty first Century”.

Click on right here to view the total white paper on the Nasdaq-100 ecosystem.

To be taught extra about NDX, try the next assets:

Touchdown Web page | One Pager | Product Information | Benchmark of the twenty first century |

For weekly analysis updates, join the “Nasdaq-100 Weekly” electronic mail e-newsletter right here.

^Footnote:

^{i Magnificent 7 shares embrace Alphabet (dad or mum of Google), Amazon, Apple, Meta Platforms (dad or mum of Fb), Microsoft, Nvidia, and Tesla. Whereas not often included within the Magnificent 7, Broadcom’s market cap has continuously been on par with (if not exceeding) Tesla’s in recent times.}

^Disclaimer:

^{Nasdaq®, Nasdaq-100 Index®, Nasdaq-100®, NDX®, and QQQ® are registered logos of Nasdaq, Inc. The data contained above is supplied for informational and academic functions solely, and nothing contained herein ought to be construed as funding recommendation, both on behalf of a specific safety or an general funding technique. Neither Nasdaq, Inc. nor any of its associates makes any advice to purchase or promote any safety or any illustration in regards to the monetary situation of any firm. Statements concerning Nasdaq-listed firms or Nasdaq proprietary indexes will not be ensures of future efficiency. Precise outcomes could differ materially from these expressed or implied. Previous efficiency will not be indicative of future outcomes. Buyers ought to undertake their very own due diligence and punctiliously consider firms earlier than investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.}

^{Data set forth on this launch incorporates forward-looking statements that contain quite a lot of dangers and uncertainties. Nasdaq cautions readers that any forward-looking info will not be a assure of future efficiency and that precise outcomes may differ materially from these contained within the forward-looking info. Ahead-looking statements might be recognized by phrases comparable to “will”, “could”, and different phrases and phrases of comparable which means. Such forward-looking statements embrace, however will not be restricted to, statements associated to the long run acknowledged progress of the Nasdaq-100 ecosystem. Ahead-looking statements contain quite a lot of dangers, uncertainties or different elements past Nasdaq’s management. These dangers and uncertainties are detailed in Nasdaq’s filings with the U.S. Securities and Change Fee, together with its annual reviews on Type 10-Okay and quarterly reviews on Type 10-Q which can be found on Nasdaq’s investor relations web site at http://ir.nasdaq.com and the SEC’s web site at www.sec.gov. Nasdaq undertakes no obligation to publicly replace any forward-looking assertion, whether or not on account of new info, future occasions or in any other case.}

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^{Written by Pranay Dureja Derivatives and QIS Index Analysis, Nasdaq International Indexes}

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