What is a NASDAQ Composite?

The Nasdaq Composite is a market cap-weighted index, simply representing the value of all its listed stocks. The set of eligible securities includes common stocks, ordinary shares, and common equivalents such as ADRs.

Why is the NASDAQ Composite a top-heavy index?

However, it's important to know that because the index is weighted by market capitalization and because some of the largest companies in the world are Nasdaq-listed, the index is rather top-heavy. In fact, the top 10 stocks in the Nasdaq Composite account for about 51% of the index's performance.

What is a NASDAQ Composite Index ETF?

An exchange-traded fund, or ETF, allows investors to buy many stocks or bonds at once. The easiest way to invest in the Nasdaq Composite Index is to buy an index fund, which is a mutual fund or ETF that passively tracks the index. An index fund is designed to invest in all of the components of a stock index and in the same weights as the index.

Can a stock be listed on the NASDAQ?

To be listed on the exchange (and therefore be included in the composite), a stock must be listed exclusively on the Nasdaq stock exchange (or have been grandfathered into a dual listing) as well as be a common stock of a domestic company or be an ADR of a foreign company. No preferred stocks or exchange-traded funds ( ETFs) are in the index.