The Nasdaq-100 Index (NDX) is one of the most widely observed equity indexes in the world and it’s the benchmark for dozens of popular exchange traded funds around the world.
To be sure, those are important traits, but Nasdaq sponsors a slew of other indexes that are often overshadowed by NDX. One of those is the Nasdaq Composite Index (COMP) which is accessible in exchange traded fund form thanks to the Fidelity Nasdaq Composite Index ETF (ONEQ).
ONEQ is more than 18 years, making it the old ETF in the Fidelity lineup, but like its underlying index, it too is overshadowed. It shouldn’t be because the Nasdaq Composite Index has its own history of stellar returns.
“On a price-return basis, the Nasdaq Composite has increased by 536.7% since the end of 2009 (as of September 30, 2021), trailing the performance of the Nasdaq-100 but still significantly outperforming the returns of the S&P 500 (up 286.3%) as well as the MSCI World Index (157.3%),” according to Nasdaq research.
COMP turned 50 years old earlier this year, confirming its track record is lengthy. It’s also broader than NDX as it’s home to 3,000 companies. COMP, like NDX, is cap-weighted. Fidelity’s ONEQ doesn’t feature exposure to all of COMP’s components, but the ETF has a roster of 1,020 stocks – still significantly more than what is found in Nasdaq-100 ETFs.
“In terms of overall sector exposures, the Nasdaq Composite is slightly less concentrated in Technology than the Nasdaq-100, with a weight of 48.4%. Health Care is one of the larger sector exposures, as is Financials (which are methodologically excluded from the Nasdaq-100),” adds Nasdaq.
Like cap-weighted Nasdaq-100 ETFs, ONEQ is heavily allocated to tech stocks (42.49%) and features significant exposure to familiar names, such as (in order) Microsoft (NASDAQ: MSFT), Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN) and Tesla (NASDAQ: TSLA).
Foreign stocks represent over 6% of COMP’s weight, which is overweight relative to comparable benchmarks. Importantly, COMP has a track record of proving sturdy in rough markets, indicating ONEQ could be a shelter-from-the-storm idea.
“The strong track record of outperformance over the past full decade has continued into 2020 and 2021, despite the challenges of the Covid-19 pandemic. Notably, COMP’s drawdown in March 2020 was less severe than either the S&P 500 or the MSCI World Index, and its recovery from the lows on March 23 was faster,” notes Nasdaq.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.