What is the Nasdaq 100?

The 21st century's most powerful economic engine runs through a single exchange. The Nasdaq 100—home to Apple, Microsoft, Nvidia, and Amazon—has become, for many investors, the defining proxy for global technology and innovation. Over the 15 years to end-2024, it delivered strong annualised returns. 

The structural case for the Nasdaq 100—concentrated exposure to companies that generate potentially high returns on capital and are high-growth industry leaders—is hard to question. But it is fair to ask what is an ideal allocation and how does it fit into a diversified portfolio.

This article explains what the Nasdaq 100 tracks, how it is constructed, how it compares to the S&P 500, and how investors in Singapore may use it as part of a broader investment strategy.

What the Nasdaq 100 actually tracks

The Nasdaq 100 is a stock market index that includes 100 of the largest non-financial companies listed on the Nasdaq Stock Market. It was launched in January 1985 and is maintained by Nasdaq, Inc.

The index uses a modified market-capitalisation weighting methodology. In practice, this means larger companies receive a higher weight, with a “cap” preventing any single company from dominating the index beyond a set threshold. The index rebalances quarterly, with an annual reconstitution every December¹.

As of April 2026, technology companies accounted for over 60% of the index by weight, with consumer discretionary (~20%) and health (~4%) far behind. The ten largest constituents—including Apple, Microsoft, Nvidia, Amazon, Meta, and Alphabet—together account for 47% of total index weight.

The index excludes financial companies by design. This distinguishes it meaningfully from the S&P 500, which includes banks and insurers, and explains why the Nasdaq 100's sector composition tilts so heavily toward technology and growth.

How the Nasdaq 100 differs from the S&P 500

Investors often compare the Nasdaq 100 to the S&P 500. The main difference is that the S&P 500 tracks 500 large-cap US companies across all 11 Global Industry Classification Standards (GICS) sectors. The Nasdaq 100 tracks 100 companies, excludes financials, and sits on a single exchange—not across NYSE and Nasdaq as the S&P 500 does.

This difference in scope and sector mix produces meaningfully different risk profiles. The Nasdaq 100 has historically exhibited higher volatility. As shown in the chart below, during the dot-com bust of 2000–2002, it fell more than 80% from peak to trough. During the 2022 rate-driven growth sell-off, it declined more than 33%—roughly double the S&P 500's drawdown over the same period².

The flip side is return. Over the decade that ended in December 2024, the Nasdaq 100 generated annualised returns significantly above the S&P 500, driven by the extraordinary earnings growth of its largest constituents. Whether this outperformance persists depends heavily on the trajectory of technology earnings and interest rate policy—and investors should pay attention to both.

A concentrated index also carries concentration risk. When Nvidia alone accounts for close to 9% of the Nasdaq 100's total weight, the index's performance becomes closely tied to the fortunes of a single company. Investors should be aware of this structural reality. Incidentally, this may be the reason why active exposure to the tech sector better suits investors wary of—de facto—large allocations to single companies. 

Why the Nasdaq 100 has attracted so much capital

The secular growth story in technology has been the defining investment narrative of the past two decades. Cloud computing, artificial intelligence, digital advertising, and e-commerce have produced some of the highest-returning businesses in market history—and most of them sit in the Nasdaq 100.

The index also benefits from a self-reinforcing dynamic: as technology companies grow and their market capitalisations rise, their weight in the index increases, drawing further capital from passive investors tracking it. 

For investors outside the United States, the Nasdaq 100 offers a straightforward route to some of the world's highest-quality businesses. In Singapore, where domestic equity markets skew toward financials, property, and industrials, the Nasdaq 100 provides potential sector diversification that local markets cannot.

That said, the concentration in US technology also means the Nasdaq 100 introduces currency risk, regulatory risk (US and Chinese technology policy, in particular), and valuation sensitivity to interest rate movements. These are features of the index, not flaws—but they require acknowledgement. They may also steer investors away from passive exposure (such as through ETFs) and towards active management. 

The case for including the Nasdaq 100 in a portfolio

Portfolio construction is about combining assets whose risk and return characteristics exhibit low correlation. The Nasdaq 100 has historically shown relatively low correlation with bonds and alternative assets, and moderate correlation with broader equity markets—making it a potentially useful building block when sized appropriately.

For investors with a long time horizon—say, 10 years or more—the higher short-term volatility of the Nasdaq 100 may be an acceptable trade-off for its potential long-run return. For investors closer to drawing on their capital, a smaller allocation or none at all may be more appropriate.

More broadly, a portfolio with a core allocation to a global equity index—such as MSCI World or a total-market fund—supplemented by a (potentially actively managed) satellite allocation to technology stocks may capture the upside of technology-driven growth while maintaining sector diversification.

The key discipline is sizing. An uncapped tilt to the Nasdaq 100 in a rising-rate or decelerating-growth environment may produce significant short-term underperformance. Positioning it as a measured—potentially actively managed—satellite rather than a core holding is typically more appropriate for retail investors.

How to invest in the Nasdaq 100 from Singapore

The most common vehicle for accessing the Nasdaq 100 is an ETF that tracks the index. The Invesco QQQ Trust is the largest and most liquid, listed on the Nasdaq in the United States. For investors who prefer USD-denominated access through a US-listed vehicle, QQQ and its institutional sibling QQQM are the standard choices.

Investors in Singapore also have access to Nasdaq 100 ETFs listed on local exchanges.  

On Endowus, investors may gain exposure to the tech sector through the Endowus Satellite Technology Portfolio, which allocates to a suite of tech-focused actively managed funds. 

Investment implications

The Nasdaq 100 is, factually, a concentrated bet on the continued growth of US technology companies—a bet that has been well-rewarded historically and may continue to reward patient investors over long time horizons. But it carries real volatility and concentration risk that must be managed.

A sensible approach would be to treat Nasdaq 100 stocks—or to the index altogether—as a high-conviction satellite allocation within a broader globally diversified portfolio, not as a standalone core position. 

For investors using Endowus, our advisers can help you determine whether and how much technology exposure is appropriate for your goals, time horizon, and risk profile. 

Frequently asked questions about the Nasdaq 100

What is the Nasdaq 100?

The Nasdaq 100 is a stock market index tracking 100 of the largest non-financial companies listed on the Nasdaq exchange. It uses a modified market-capitalisation weighting and is reconstituted annually. Technology companies account for more than half its weight.

How is the Nasdaq 100 different from the Nasdaq Composite?

The Nasdaq Composite includes all companies listed on the Nasdaq exchange—more than 3,000 stocks. The Nasdaq 100 is a subset of the 100 largest non-financial companies. The Nasdaq 100 is the more commonly tracked index for investment purposes.

Is the Nasdaq 100 a good investment?

The Nasdaq 100 has delivered strong long-run returns, but it carries higher volatility than broader equity indexes such as the S&P 500. Whether it is suitable depends on your investment horizon, risk tolerance, and existing portfolio. 

How can I invest in the Nasdaq 100 from Singapore?

The most common route is through an ETF. Major options include the Invesco QQQ Trust (listed in the US), as well as locally listed ETFs in Singapore. On Endowus, investors may gain exposure to the tech sector through the Endowus Satellite Technology Portfolio, which allocates to a suite of tech-focused actively managed funds. 

What are the risks of investing in the Nasdaq 100?

Key risks include concentration in a small number of large technology companies, sensitivity to interest rate movements (which affect the valuation of growth stocks), currency risk for non-USD investors, and regulatory risk across US and Chinese technology sectors. Investors should weigh these against their individual circumstances.

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¹The list of companies inside the index is fully rebuilt once a year in December to match the market's current reality, while the companies’ assigned weights are tweaked every quarter to keep the index properly aligned and properly diversified.

²Source: Bloomberg. Calculations: Endowus Research.