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.