Nasdaq Smart Sectors

Aim to find those securities with the greatest potential for capital appreciation

This Solution Helps

  • Asset Managers
  • ETF Sponsors
  • Financial Advisors
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Nasdaq Smart Sectors Family aims to provide exposure to the most liquid securities in each sector and a modified factor weighting is applied incorporating value, growth and volatility.

The proliferation of sector indexes has made it easier than ever for investors to implement sector-related strategies. The use of sector index-based strategies provides instant diversification, reducing risk compared to purchasing individual stocks. If you’re looking for exposure to a specific sector, following an index can help capture that trend efficiently without worrying about selecting specific securities in that sector.

Nasdaq provides a wide-ranging family of sector indexes based on the Industry Classification Benchmark (ICB) and designed for different purposes. 


Featured Nasdaq Smart Sector Indexes:

Construction

The unique methodology behind the index ensures that the “best of breed” within each sector is included. No other U.S. Sector index uses these factors in its methodology; rather most are market-cap weighted.

Methodology 

1. Select stocks from the Nasdaq U.S. Benchmark Index based on appropriate ICB sector classification 

2. Rank eligible securities based on the 3 factors 
    i. Value  

    ii. Growth  

    iii. Volatility

3. A combined score is calculated based upon the factors and utilized to create security weights 

Nasdaq Smart Sectors capture returns that previously were only available to active investors.

 

Factors

Nasdaq Smart Sector Indexes are designed to provide exposure to the most liquid securities in each sector then the securities are weighted using a factor based approach. Utilizing a combination of value, growth, and volatility, the index identifies names which exhibit characteristics with the greatest potential for capital appreciation.

Companies are weighted by a combined factor score of the three factors. The methodology ensures that the “best of breed” within each sector are overweighted.

Key Benefits

Exposure

Nasdaq Smart Sector Indexes are designed to provide exposure to the most liquid securities in each sector then the securities are weighted using a factor based approach.

Factor-Driven

The Nasdaq Smart Sector indexes combine uncorrelated, yet complimentary factors to weight the securities within each sector.

Smart Index Construction

The unique methodology behind the index ensures that the “best of breed” within each sector is included. Most sector indexes are market-cap weighted; these are modified factor weighted.

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