THE S&P 500 and the Nasdaq These are two iconic indices of the American markets, but they do not pursue the same objectives. The first offers a broad and diverse exposure to the US economy, while the second focuses on the high-growth technology companies. Let's analyze this article, SP500 and Nasdaq: Differences and Performance 😉
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⚠️ The information in this article is historical data! Therefore, past performance is not a guarantee of future performance! Investing involves a risk of losing money.
SP500 and Nasdaq: Differences and Performances
THE Main differences between an SP500 and a Nasdaq?
SP500
The SP500 (or S&P500) is a stock market index composed of the 500 largest stocks in the USA. That is to say, the 500 best American companies.
Note that the S&P 500 includes the main stock market sectors that are invested in the American stock market. For example, finance, healthcare, and real estate.
In the technology field, it is about 30% of the stock index!
Nasdaq
It's important to know that the Nasdaq is a stock market located on Wall Street in New York, known for its concentration of technology companies. Like the New York Stock Exchange, it attracts many investors.
However, regarding trading investment, The Nasdaq stock index is an investment of approximately 100 US stocks. It's worth noting that the majority of Nasdaq stocks invest in the technology sector (60%)..
Nasdaq VS SP500
We see the first differences between these two corporations:
- Sp500 = 500 US stocks, great diversification
- Nasdaq = 100 US stocks, technology-focused stock portfolio
Note that the Nasdaq or S&P 500 plays an important role in global stock markets.
Top SP500 and Nasdaq Stocks
To give an example, as I write these lines. Here are the top 5 stocks of each index. Taking into account an example of the VOO ETF1 (ETF SP500) and an example of the QQQM ETF2 (Nasdaq 100 ETF).
SP500
- Apple (7.25%)
- Microsoft (6.75%)
- Nvidia (6.11%)
- Amazon (3.56%)
- Facebook (2.56%)
Nasdaq
- Apple (8.64%)
- Nvidia (8.54%)
- Microsoft (7.77%)
- Broadcom (5.27%)
- Meta (5.08%)
First conclusion – Diversification
As a first conclusion, we find that the SP500 is arguably more varied and more diverse!
In fact, the SP500 compared to the Nasdaq:
- Owns about 400 more shares
- Less dependent on the stock market performance of the technology sector
- The top 3 of the Nasdaq means 25% of the stock portfolio, while the top 3 of the SP500 means ”"uniquely'’‘'20.11% of the stock portfolio.
Therefore, if we analyze stock market diversification, there is an advantage to the SP500!
Stock market performance between the S&P 500 and the Nasdaq?
Once you understand the main differences between SP500 and Nasdaq. The next question is which one performs better? 🤔
In order to compare, I took the SP500 stock index and the Nasdaq stock index. And then, I compared the performance in 10 years! (Between November 2014 and November 2024)
- SP500 = 182%
- Nasdaq = 380%
Second conclusion – Performance
Regarding performance, in 10 years, we note that Nasdaq was more profitable in 198% compared to SP500. Amazing 😮
Dividends of SP500 and Nasdaq?
Regarding dividends, SP500 distributes more dividends per year!
- SP500 = +/- 1.4%
- Nasdaq = +/- 0.7%
Third conclusion – Dividends
The SP500 distributes approximately twice as many dividends as Nasdaq.
ETF SP500 and ETF Nasdaq?
The easiest way to benefit from the performance of an SP500 or Nasdaq is to own an ETF.
Here are some ETFs with the requested TER. Note that the TER is the management fee that the shareholder pays to the ETF holder.
AND F SP500
| AND F | Business | ETF country of origin | TER requested |
|---|---|---|---|
| VOO | Vanguard | USA | 0.03% |
| P500 | Invesco | Ireland | 0.05% |
| VUSA | iShares | Ireland | 0.05% |
Nasdaq
| AND F | Business | ETF country of origin | TER requested |
|---|---|---|---|
| QQQ | Invesco | Ireland | 0.30% |
| QQQM | Invesco | USA | 0.15% |
| CSNDX | iShares | Ireland | 0.33% |
Fourth conclusion – ETF management fees
therefore, we conclude that Nasdaq ETFs are more expensive than SP500 ETFs!
SP500 and Nasdaq: Differences and Performances
Conclusion
In conclusion, we can summarize this article, SP500 VS Nasdaq, in 4 essential aspects!
| Better diversification? | SP500 |
| Best Performance (between 2014 to 2024)? | Nasdaq |
| Best dividend distribution | SP500 |
| Cheapest ETF? | SP500 |
My opinion?
👉 I think the SP500 or the Nasdaq are very good ETFs to invest in, for shareholders looking to invest in the American stock market.
Indeed, following these stock market indices has historically been a good stock market investment for the long term.
In my opinion, SP500 is better for a FIRE retirement because the volatility is less compared to Nasdaq. In addition, SP500 is more diversified than Nasdaq.
However, if the goal is to grow your wealth over the long term, while accepting significant market volatility, then I think a Nasdaq ETF is the best option!
Indeed, if we analyze a portfolio of SP500 Nasdaq shares over a long period, the return of a Nasdaq ETF achieves a better stock market return.
SP500 and Nasdaq: Differences and Performances
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SP500 and Nasdaq: Differences and Performances
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