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When Performance Matters: Nasdaq-100 vs. S&P 500, Third Quarter '21

The Nasdaq-100 TR Index has outperformed 11 out of the 13 full calendar years in our study.

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The Nasdaq-100 and S&P 500 are two of the most popular equity indexes in the US. The Nasdaq-100 is heavily allocated towards top-performing industries such as Technology, Consumer Discretionary, and Health Care, which have helped the Nasdaq-100 outperform the S&P 500 by a wide margin between Dec. 31, 2007 and Sept. 30, 2021. Below is a comparison of annual total returns - which reinvest dividends - between each index. The Nasdaq-100 TR Index has outperformed 11 out of the 13 full calendar years in our study.

Annual Total Return Performance | Cumulative Total Return Performance
Historical Performance

Historical Performance

Despite recent overall market volatility, the Nasdaq-100 TR Index has maintained cumulative total returns of approximately 2.5 times that of the S&P500 TR Index.

Rolling Volatility (One Year)

One year rolling volatility (calculated by taking the standard deviation of daily returns, annualized) of the Nasdaq-100 has been modestly elevated vs. the S&P 500, averaging only 2.58% higher between Dec. 31, 2009 and Sept. 30, 2021. The overall correlation of daily returns was 93% - rather impressive given the concentrated exposure of the Nasdaq-100 towards Technology.

Rolling Volatility

Current Industry Weights

We can see important differences in sector exposures between the Nasdaq-100 and the S&P 500 as of Sept. 30, 2021. As mentioned previously, the outsized allocations to both Technology and Consumer Discretionary have helped propel the Nasdaq-100 Index to multiple new all-time highs in 2021, including in the third quarter of this year.

Industry (ICB) Breakdown

Conclusion

The Nasdaq-100 finished the third quarter of 2021 with a gain of 1.09% compared to the S&P 500 gain of 0.58%, narrowing the YTD underperformance gap to only 133 bps. While notable, this pales in comparison to 2020's incredible 3,000+ bps of outperformance. The Nasdaq-100 is heavily allocated towards top-performing industries such as Technology, Consumer Discretionary, and Health Care. The long-run growth trend of companies in these industries has remained strong in spite of the widespread economic disruption from the COVID-19 pandemic. Given the way technology is influencing the world and making companies more efficient, there is a strong possibility that this trend continues into the future.


Sources: Nasdaq Indexes, Bloomberg


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 investment advice, 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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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