Why advisors should look to the Nasdaq-100® for growth

The following sponsored content was produced by BMO Exchange Traded Funds 

The Nasdaq-100 Index® (NDX®) may not be new, but its relevance has never been greater. A strategic allocation offers clients direct exposure to durable businesses driving key growth themes like Artificial Intelligence (AI), cloud computing, and robotic surgery. With equity markets rewarding innovation, it’s an index worth a closer look, especially for clients with long time horizons. 

While some may view it as overlapping with existing U.S. holdings, we see it as a front-row seat to the world’s most dynamic innovation engine. 

The growth of the Nasdaq-100® 

The Nasdaq-100® tracks the 100 largest non-financial companies listed on the Nasdaq Stock Market. When the Index launched 40 years ago, its market cap was just US$58 billion. Today, it has grown to over US$27 trillion, anchored by the Magnificent Seven — Amazon, Alphabet, Apple, Meta, Microsoft, Nvidia and Tesla. 

But it’s not just about technology. Over time, it has broadened to include leaders across multiple sectors — from Costco and PepsiCo in consumer staples, to Intuitive Surgical and Gilead Sciences in health care, and Honeywell and CSX Corp in industrials3. 

Why precision exposure matters 

Here are three reasons why the Nasdaq-100® may warrant its own position in the growth sleeve of client portfolios. 

1. Diversification beyond traditional industries 

Canada’s market leans heavily on financials, energy, and materials. By contrast, the Nasdaq-100® tilts toward sectors driving structural change. 

Chart title: S&P/TSX Composite and Nasdaq-100 sector weights 

Source: Standard & Poor’s, Nasdaq Global Indexes, BMO GAM. Data as of May 26, 2025. 

While many Nasdaq-100® companies are also present in the S&P 500, that index also includes traditional sectors. 

And depending on how a portfolio is split between developed and emerging markets, growth themes such as AI, digital health, and cloud computing may be underrepresented in a total portfolio context. 

2. It captures companies investing heavily in innovation 

Whether it’s Nvidia designing next-generation computer chips, Costco expanding its Kirkland line, or Netflix upgrading its recommendation engine, Nasdaq-100 companies are relentless in research and development (R&D). 

On a percentage-of-sales basis, the Index’s constituents spend seven times more on R&D than the average non-tech S&P 500 company. 

Chart title: Weighted average R&D as percentage-of-sales 

Source: Nasdaq Global Indexes, Factset. Data as of December 31, 2024. 

3. A track record of resilience 

The Nasdaq-100® captures market leaders with high margins, strong balance sheets, and a track record of reinvesting in growth — traits that have historically supported long-term outperformance compared to other key indices, albeit with higher volatility. 

Table title: Index performance and volatility comparisons 

Source: Nasdaq Global Indexes, Standard & Poor’s, NYU Stern Volatility Lab, BMO GAM. Data as of May 26, 2025. 

While past performance is no guarantee of future results, today’s Nasdaq-100® reflects profitable, reinvestment-led businesses with durable models. Magnificent Seven earnings are forecast to grow 15% in 2025 and 2026, while recent volatility may present a long-term entry point for patient investors. 

Accessing the Nasdaq-100® 

Advisors can access the Index efficiently through two BMO ETF options: 

• BMO Nasdaq 100 Equity Index ETF (ZNQ) – Offers unhedged exposure in U.S. dollars. Also available in mutual fund.  
• BMO Nasdaq 100 Equity Hedged to CAD Index ETF (ZQQ) – Currency-hedged for clients seeking to reduce the impact of currency movements. 

Both products provide cost-effective, diversified exposure to a high-conviction segment of the global equity market without the complexity of individual stock selection. 

For Financial Advisors Only

Slides used in this article by Nasdaq Global Indexes can be accessed here.

DISCLAIMERS

This article is sponsored by Nasdaq-100 Index (NDX)

This article is intended for informational purposes only and is not, and should not be construed as, investment and/or tax advice to any individual. Particular investments and/or trading strategies should be evaluated relative to each individuals’ circumstances. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment.​

Index returns do not reflect transactions costs or the deduction of other fees and expenses and it is not possible to invest directly in an Index.

BMO Global Asset Management (BMO GAM) is a brand name under which BMO Asset Management Inc. and BMO Investments Inc. operate. BMO ETFs are managed and administered by BMO Asset Management Inc., an investment fund manager and portfolio manager and separate legal entity from Bank of Montreal.  BMO Mutual Funds are offered by BMO Investments Inc., a financial services firm and separate entity from Bank of Montreal.

Commissions, management fees and expenses (if applicable) may be associated with investments in mutual funds and exchange traded funds (ETFs). Trailing commissions may be associated with investments in mutual funds. Please read the fund facts, ETF Facts or simplified prospectus of the relevant mutual fund or ETF before investing. Mutual funds and ETFs are not guaranteed, their values change frequently and past performance may not be repeated. ​

Past performance is not a guide to future performance. Performance is shown net of fees, in the currency of the respective share class with dividends reinvested.

For a summary of the risks of an investment in BMO Mutual Funds or BMO ETFs, please see the specific risks set out in the simplified prospectus of the relevant mutual fund or ETF. BMO ETFs trade like stocks, fluctuate in market value and may trade at a discount to their net asset value, which may increase the risk of loss. Distributions are not guaranteed and are subject to change and/or elimination. ​

Third-Party Links and Content: Nasdaq®, Nasdaq-100 Index ®, Nasdaq-100®, NDX are registered trademarks of Nasdaq, Inc. (which with its affiliates is referred to as the “Corporations”) and are licensed for use by BMO Investments Inc. The Product(s) have not been passed on by the Corporations as to their legality or suitability. The Product(s) are not issued, endorsed, sold, or promoted by the Corporations. The corporations make no warranties and bears no liability with respect to the product(s).

This article may contain links to other sites that BMO Global Asset Management does not own or operate. Also, links to sites that BMO Global Asset Management owns or operates may be featured on third-party websites on which we advertise, or in instances that we have not endorsed. Links to other websites or references to products, services or publications other than those of BMO Global Asset Management in this article do not imply the endorsement or approval of such websites, products, services or publication by BMO Global Asset Management. We do not manage, and we are not responsible for, the digital marketing and cookie practices of third parties. The linked websites have separate and independent privacy statements, notices and terms of use, which we recommend you read carefully.

Any content from or links to a third-party website are not reviewed or endorsed by us. You use any external websites or third-party content at your own risk. Accordingly, we disclaim any responsibility for them.