Should You Invest In NASDAQ100 Index (Non Expiry)?

1. Low-risk long-term investors: Apart from global events in which markets around the world collapsed, the Nasdaq graph has shown steady gains over time and could be a good option for long-term investment.

2. Thematic investment in the tech sector: Since a large portion of the Nasdaq 100 is composed of tech stocks, it could present a good option for those who wish to invest in the sector as a whole.

3. Hedging against single-stock fluctuations: Those who invest in individual stocks who relate to the index, could use the Nasdaq as a hedging tool.

4. Believers in the American economy: The Nasdaq is often affected by the US government’s economic policies, and those who believe it is heading for increased growth should consider investing in the Nasdaq.

Like many financial assets, there are a variety of factors that influence Nasdaq prices. However, when focusing on short-term movements, it is possible to narrow the list. One factor that is easily noticeable is how the Nasdaq relates to other indices in the US. The Nasdaq is often mentioned alongside Dow Jones and S&P 500. From a broader standpoint, since all three can serve as measures for the overall health of the American economy, it is not uncommon to see all three move in the same direction when there’s a positive trend in the US market. However, this factor could contradict the next factor, which relates to the Nasdaq’s composition.

Since the Nasdaq is composed of individual companies, it is possible for it to move in the opposite direction of the other two indices in certain instances. A good example would be earnings reports: If the markets are moving in a downward trend, but at the same time, a significant company, such as Facebook, releases an impressive earnings report, its stock could go up, lifting the index as a whole.

Another important aspect of the Nasdaq 100 index is how it relates to other investment mechanisms. The Federal Reserve sets the interest rates in the US, affecting the US Dollar, bank rates, and other financial instruments. Since the stock market in general, and index-based ETFs in particular, serve as investment tools - they often move up when interest rates are lower. Long-term investors will often opt to low-risk low-yield options as a means of making a profit over time. If interest rates are low, bank savings could lose their appeal, while other options become more alluring for investors. Therefore, if the Fed lowers interest rates, it is quite possible that many investors will opt to invest in the Nasdaq 100 index, as it could have the potential to show more gains over time, while offering the perceived stability of an ETF.

The Nasdaq 100 index was introduced in 1985 by Nasdaq, the world’s second-largest stock exchange (after the New York Stock Exchange). It was created alongside the Nasdaq composite index in an attempt to give investors more segmented exposure to the American market. Over the years, it has seen ups and downs, usually reverting to losses after a major global event, such as the 9/11 attacks in the US and subsequent war in Afghanistan, or the 2008 market crash. Despite its overall graph having significant differences between high and low points, since 2008, it has shown steady gains, mostly fueled by the booming tech sector in the US.