Differences From NASDAQ Composite Index
The NASDAQ-100 is frequently confused with the Nasdaq Composite Index; the latter index (often referred to simply as "The Nasdaq") includes the stock of every company that is listed on NASDAQ (more than 3,000 altogether) and is quoted more frequently than the NASDAQ-100 in popular media.
The NASDAQ-100 is a modified capitalization-weighted index. This particular methodology was created in 1998 in advance of the creation the NASDAQ-100 Index Trust, which holds portions of all NASDAQ-100 firms. The new methodology allowed NASDAQ to reduce the influence of the largest companies and to allow for more diversification.
The only time the index is to be rebalanced again is if:
- One company is worth 24% of the index.
- Those companies with a weighting of at least 4.5% constitute 48% of the index.
Read more about this topic: NASDAQ-100
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