Nasdaq Index Fund Performance: August 2022
Performance in August across Nasdaq’s suite of indexes was broadly negative, with an average loss of 3.2% across 100 indexes in our index tracker; only 21 indexes registered positive price performance. In the attached report, the Nasdaq Featured Indexes highlight the breadth of the weakness across the high-growth, Tech-exposed Nasdaq Composite and Nasdaq-100, down 4.6% and 5.2%, respectively. While still negative, the Nasdaq-100 Ex-Tech Sector Index’s loss of 3.0% was less than half as bad as that of the Nasdaq-100 Technology Sector Index, down 7.1%. The more midcap-exposed Nasdaq Q-50 and Nasdaq Next Generation 100 fared a bit better, with losses of 2.5% and 3.5%, respectively. The only positive performer in the suite was the Nasdaq Innovators Completion Cap Index, up 3.9%; launched in June, it tracks 200 of the most innovative, small-cap Nasdaq-listed names outside of the Nasdaq-100 and Nasdaq Next Generation 100.
Global Indexes Performance
Nasdaq’s Global Indexes tell a story of weakness across most Developed Markets, with the worst of it concentrated in Europe, down 6.5%. Within Europe and specifically the Nordic suite, the OMX Helsinki 25 Index was a relative outperformer, down only 2.0%. Within the US, small cap was a relative outperformer, down only 2.1% vs. large cap down 4.2%. Within Emerging Markets, Asia-Pacific ex-Japan was a relative underperformer, down 0.2% vs. overall EM up 0.9%.
Dividend & Income Indexes Performance
Nasdaq’s Dividend & Income Index suite was also subject to broad-based weakness, with an average loss of 3.2%. Only the Nasdaq Select Canadian Preferred Share Index was positive for the month, up 0.7%.
Dorsey Wright Indexes Performance
Nasdaq’s Dorsey Wright Indexes, driven by exposure to the momentum factor, fared quite a bit better with an average loss of only 0.6%. The Nasdaq Dorsey Wright Energy Technical Leaders Index was the top performer in the group, up 5.7%. The Dorsey Wright Healthcare Tech Leaders Index also outperformed, up 3.3%, while a handful of other sector indexes, as well as Focus Five and Small Cap Tech Leaders, saw minimal gains or losses.
Green Economy Indexes Performance
While traditional Energy (i.e., Oil & Gas) has been outperforming most of this year, Green Economy Indexes have been underperforming after generating some of the strongest returns in 2020 and 2021. The broadest index in the group – Nasdaq OMX Green Economy – was down 5.6% last month, bringing its trailing 1-year loss to 15.2%. After some strong performance earlier this year, Nasdaq OMX Solar reversed a big chunk, dropping 9.6% in August.
Tech Suite Indexes Performance
Within Nasdaq’s Thematic suite of indexes, the PHLX Semiconductor and Nasdaq US Smart Semiconductor Indexes were the worst performers, down 9.8% and 9.3% respectively. Nasdaq Junior Biotechnology was by far the outperformer in the group, and also the best performer in our entire tracker, up 8.9%. Three of our cybersecurity indexes recorded small but noteworthy gains during the month, illustrating the unique defensive nature of this particular theme. Nasdaq Clean Edge Green Energy also stood out, up 2.9% and meaningfully outperforming similar indexes in the space.
Other Assets Indexes Performance
Finally, we round things out by highlighting that weakness across equities extended to other asset classes as well, including Options, Fixed Income, and Cryptocurrencies. Within Nasdaq’s Options suite, the Nasdaq-100 Monthly Net Credit Collar 95-100 Index was the relative outperformer, down only 0.5%. In Fixed Income, the Emerging Markets indexes within the Bullet Shares suite generated marginally positive performance, vs. generally negative results in US Corporate Bonds and High Yield in particular. Losses were most severe across cryptocurrencies, with the Nasdaq Crypto Index down 14.7%, driven by the Nasdaq Bitcoin Index losing 16.5%. The Nasdaq Ethereum Index was a relative outperformer, down only 10.3%.
August Index Funds Performance Summary
As the first half of 2022 wound down, we became hopeful for a near-term market recovery based on a few key factors: inflation rates potentially peaking and normalizing downward; less hawkishness from the Fed as a result; continued strength in some of the most important drivers of US economic growth (e.g. employment and consumer spending); historically attractive valuations and resilience across much of large-cap Tech. While much of that has played out during the most recent earnings season, the Fed remains quite hawkish, maybe more so than market participants had priced in to their expectations. The Fed’s Jackson Hole summit crystallized the anxiety among many investors that the rate hiking cycle may persist for too long and go too far, driving up the odds of a hard landing and extended recession. That, along with a realization that September is often a challenging month for equity markets, likely contributed to broad based weakness in the final days of August.
It remains to be seen how quickly inflation can be tamed, and thus how long the market will wrestle with the risks of contractionary monetary policy. For now, we remain cautiously optimistic that things are moving in the right direction for the rest of this year, while a mix of good and bad economic data may very well keep things choppy for the foreseeable future.
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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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