Nasdaq and CTA, Partners in Indexes, and Innovation
Efram Slen, Nasdaq, Head of Index Research
Brian Comiskey, CTA, Director of Thematic Programs
For 13 years, CTA has partnered with Nasdaq to develop and maintain a portfolio of stock market indexes that are theme-based, or tied to broad industry trends such as cybersecurity, digital health, and gaming. These thematic indexes are passive portfolios consisting of baskets of companies that have a position in these areas.
Thematic investing in passive funds can offer an important way to gain exposure to key industry trends, as they track indexes that follow rules-based methodologies and are updated at scheduled intervals. With an active index fund, a fund manager builds a basket of assets, usually put together to try to outperform index benchmarks such as the S&P 500, MSCI ACWI and others. This latter approach allows for active buying and selling of securities, typically to boost performance. For this reason, active index investing may be more vulnerable to the whims of a market hungry for what’s hot right now.
While investors cannot buy an index directly, they can buy passive investment vehicles, such as ETFs and mutual funds, that track them.
A History in Tracking Innovation
The Nasdaq CTA index partnership started in 2010 when Nasdaq and CTA teamed up to develop the Nasdaq CTA Smartphone™ Index (QFON™). The index features more than handset manufacturers and service providers to include lesser-known businesses in that field, such as communications infrastructure providers (e.g., tower companies) and component manufacturers.
In 2015, CTA and Nasdaq launched the Nasdaq CTA Cybersecurity™ Index (NQCYBR™). Although an obvious theme for an index today, cybersecurity had only just become highly investible as major IPOs hit the market. As one of the first thematic cybersecurity indexes in the sector at that time, this thematic index took off among financial institutions. Today, it serves as the baseline for one of the world’s largest cybersecurity ETFs.
Then, in 2017, the portfolio grew with the launch of the Nasdaq CTA Artificial Intelligence & Robotics™ Index (NQROBO™). In 2018, Nasdaq and CTA launched an AI-only index, the Nasdaq CTA Artificial Intelligence™ Index (NQINTEL™). Funds tracking these indexes launched across four countries in 2018, half a decade before today’s market fascination with AI.
Bringing together the qualitative and quantitative
At each reconstitution, CTA provides the universe of securities associated with each theme to Nasdaq. Nasdaq then conducts all other elements of the reconstitution according to each index methodology, including factors such as liquidity and market capitalization to determine the final basket of eligible names. Other than managing its portion of each reconstitution, Nasdaq is responsible for the ongoing management, calculation, and dissemination of the indexes.
As the subject-matter expert, CTA uses a combination of public data and sources, specialized database subscriptions and other data-monitoring strategies for their review.
As the financial-industry expert, Nasdaq brings its index, quantitative and regulatory expertise into the creation and management of its portfolio of indexes.
This combination of qualitative and quantitative expertise has brought new investing opportunities across thematic technology trends to the table.
Building on the Legacy
Today, Nasdaq and CTA are partnered on 16 thematic indexes covering cloud computing, climate technology and much more joining the portfolio. Some 20 funds listed across more than seven countries track the Nasdaq CTA index portfolio.
This expansion affirms CTA’s authority as a third-party research provider to the index industry, and a leader in identifying and evaluating critical tech trends for the thematic-investing sector.
To build on this legacy, Nasdaq and CTA are looking to the next wave of innovation with development underway for indexes in space and agrifood tech, as well as futuristic concepts such as immortality technology. CES 2024 will showcase innovations in many of these categories when the industry’s best and brightest return to Las Vegas January 9-12. In the meantime, take a closer look at Nasdaq CTA’s thematic indexes.
Disclaimer:
This content is for information purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. CTA does not offer or sell securities to any persons. No third party is authorized to make any recommendation with respect to any securities or any other disclosures on behalf of CTA. Please consult your financial adviser, investment professional, tax adviser or legal counsel prior to considering any investment
This content may include or be based in part on projections, valuations, estimates and other financial data supplied by third parties, which have not been verified by CTA. This information should not be relied upon for the purpose of investing in any securities or for any other purposes without independent verification. Any information regarding projected or estimated investment returns are estimates only and should not be considered indicative of the actual results that may be realized or predictive of future performance. Past results should not be viewed as indicative of future performance.
Nasdaq® is a registered trademark of Nasdaq, Inc. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as , either on behalf of a particular security or an overall investment strategy. Neither Nasdaq, Inc. nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding Nasdaq-listed companies or Nasdaq proprietary indexes are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Nasdaq Index Research Team
Nasdaq
Nasdaq calculates more than 40,000 diverse indexes, providing coverage across asset classes, countries and sectors.
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Consumer Technology Association
As North America’s largest technology trade association, CTA® is the tech sector. Our members are the world’s leading innovators – from startups to global brands – helping support more than 18 million American jobs. CTA owns and produces CES® – the most influential tech event in the world.
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