Excursus: NASDAQ and S&P 500 – further return potential on Wall Street
Although the Dow Jones Industrial Average Index is by far the best-known index in the USA, anyone who wants to add American securities to their portfolio has other options. For example, investors in the US can also rely on an index that only contains technology companies. The largest electronic exchange in the United States is the National Association of Securities Dealers Automated Quotations (NASDAQ). There are of course several indices of interest to investors, the largest being the NASDAQ Composite, which lists over 3,000 companies (mostly from the technology sector).
Or you can invest in the NASDAQ 100 Index, which lists the 100 largest technology companies in the United States by market capitalization. NASDAQ 100 ETFs, for example, offer the issuers ComStage, amundi and iShares – with the ETF search you get an overview.
Investors who are interested in the US markets should also know another US price index: the Standard and Poor’s 500 (S&P 500 for short). This American stock index contains around 500 companies and is therefore a real heavyweight on Wall Street. It covers approximately three quarters of the US stock market. Some financial experts believe that the S&P is more informative than the Dow Jones due to its market capitalization-weighted calculation method. This means that the market capitalization of a company plays a decisive role for inclusion in this index. ETFs on the S&P 500, for example, offer the HSBC and iShares – here you can also use the ETF fund search from finanzen.net for your product research.
Our recommendation: With 30 stocks, the Dow Jones index is somewhat more manageable than the NASDAQ Composite or the S&P 500. However, because you are investing in “global players”, the chances of a return are higher with a Dow Jones ETF. Investors who want to spread their risk across a large number of stocks should rather invest in indices with more listed companies.
Important: With all investments that you do not make in euros, you should keep the currency risk in mind. In our ETF lexicon, we have summarized exactly what this is and what you should pay particular attention to.