What Is the NASDAQ-100 Equal Weighted Index

The NASDAQ-100 Equal Weighted Index is a version of the NASDAQ-100 Index. Each of the securities in this 澳洲幸运5官方开奖结果体彩网:market-capitalization-based index is initially set at a weight of 1%. The NASDAQ-100 Equal Weighted Index offers an alternative to market capitalization weighting, which is a more common method of weighting 澳洲幸运5官方开奖结果体彩网:index funds. The 澳洲幸运5官方开奖结果体彩网:equal weighting means that the index's smaller companies contribute as much as its larger companies. The NASDAQ-100 is rebalanced quarterly and is reconstituted annually in December. There are several ETFs that track the movements of the index.

Breaking Down NASDAQ-100 Equal Weighted Index

The Nasdaq 100 Index is composed of  excluding financial services. As of Sept. 7, 2021, a large portion of the index covers the 澳洲幸运5官方开奖结果体彩网:technology sector, which accounts for about 40% of the index's weight. The next largest sector is consumer services, represented by companies like restaurant chains, retailers, and travel services. These stocks account for about 20% of the cap weight thanks to the continued growth of retail giant Amazon (AMZN). Rounding out the index is healthcare, consumer goods, and industrials. The diversity of companies included in the Nasdaq 100 helped drive strong returns for the past two decades. The index is constructed on a modified capitalization methodology, meaning individual weights are according to market capitalization with constraints to limit the influence of the largest companies. To accomplish this, Nasdaq reviews the composition of the index each quarter and adjust weightings if the distribution requirements are not met. 

Criteria for eligibility 

For inclusion in the Nasdaq-100, an index security must be listed exclusively on a Nasdaq exchange. This can include common stocks, ordinary shares, American Depositary Receipts ADRs, and tracking stocks. Other grounds for inclusion comprise market capitalization and liquidity. While there is no minimum requirement for market capitalization, the index itself represents the top 100 largest companies listed on the Nasdaq.

The Nasdaq 100 is traded through the Invesco Trust QQQ, designed to track the performance of the 100 largest companies on the Nasdaq exchange. Each company in the trust must be a member of the Nasdaq 100 and be listed on the broader exchange for at least two years. Some exceptions are made for newly public companies that have extremely high market capitalizations. In addition, listed stocks need to have an 澳洲幸运5官方开奖结果体彩网:average daily trading volume of 200,000 and publicly report earnings quarterly and annually. Companies with bankruptcy issues are omitted from the Invesco Trust QQQ. On occasion, the composition of the trust may not identically match the Index, but the main objective of the QQQ is still to track the price and performanceꦏ of the underlying index.

Special rebalancing update

Nasdaq has announced a special rebalance of the Nasdaq-100 Index, effective before market open on July 24, 2023. This rebalance is designed to prevent overconcentration by adjusting the weights of the listed companies but won't add or remove any firms. The Nasdaq-100 Index, a benchmark for many global financial products, usually undergoes annual reconstitution in December with additional quarterly chances for rebalancing. The specific changes for this special rebalance will be based on the securities and shares as of July 3, 2023, with details announced on July 14, 2023.

The Bottom Line

The NASDAQ-100 Equal Weighted Index is composed of the 100 largest non-financial securities listed on NASDAQ, each given equal weight. This approach allows smaller companies to have a more significant impact on the index's performance compared to the regular NASDAQ-100 Index. The index is typically rebalanced quarterly and heavily represents the technology and consumer services sectors. Changes in company listings are handled by adjusting the weights of the remaining companies.