Monday, July 03, 2017

Historical Total Returns for the Nasdaq-100 (1986-2016)

The Nasdaq-100 Index is one of the most widely-followed U.S. stock market indexes.  The Nasdaq-100 includes 100 of the largest domestic and international non-financial securities listed on the Nasdaq Stock Market based on market capitalization and is largely comprised of technology and biotech equities. The weightings of companies in the index are based on their respective market capitalizations, with rules capping the influence of the largest components. As of June 29, 2017, the four largest components of the index are Apple (comprising about 11.61% of the index), Microsoft (comprising about 8.23% of the index), Amazon (comprising about 7.15% of the index), and Facebook (comprising about 5.52% of the index).  Google would have been the second largest component (comprising about 9.15% of the index) if it had not been split into two different equities, Goog and Googl, a split which occurred in 2014.

The Nasdaq-100 was initiated on January 31, 1985 and became one of the most widely-followed technology indexes during the bubble. The chart below (click on the chart for a larger view) illustrates historical annual returns for the Nasdaq-100 index between the calendar years 1986 and 2016.  The Nasdaq-100 Index does not account for dividend payouts, but the Nasdaq-100 Total Return Index, which was initiated on March 4, 1999, does account for dividends.  The chart below calculated based on returns for (a) the Nasdaq-100 Index from January 1, 1986 - March 3, 1999; and (b) the Nasdaq-100 Total Return Index from March 4, 1999 - December 31, 2016. 

As shown below, the Nasdaq-100 recorded its second consecutive relatively mediocre annual return during 2016, rising 7.27%, although the index rose approximately about 338.6% during the calendar years between 2009 and 2016, an annualized return of an impressive 20.30%.  The Nasdaq-100 has rebounded in the first half of 2017, rising approximately 16.78% through the market close on June 30, 2017.

I still believe that the Nasdaq-100 is in the beginning or middle stages of a multi-year secular bull market run as investors reconsider the potential of high tech companies.  The Nasdaq-100 returned a total of about 4025.37% between 1986 and 2016, an annualized return of about 12.75%.  This greatly outperforms the total return of  about 2062.07%, or about 10.42% of the the S&P 500 Index during the same period of time.

No comments: