Nasdaq Rolls Out Optimized Nasdaq-100

By
May 05, 2011
Share:

The Nasdaq-100 gets optimized, and company plans sampling on other indexes as well.

Nasdaq OMX Group, the company behind the Nasdaq exchange, is launching a new “optimized” version of its popular Nasdaq 100 Index that should offer better liquidity than the original benchmark, all while preserving return and volatility characteristics.

The Nasdaq-100 Data Explorers Optimized Index will essentially be a subset of the securities included in the Nasdaq 100 Index—a basket of the largest nonfinancial companies globally—but the new benchmark screens out stocks with low liquidity or those that are relatively expensive to borrow in the share-lending market.

At launch, the new index, which relies on data provided by global stock loan data provider Data Explorers, excluded 18 securities from the original index, the company said in a press release.

“The launch of the NASDAQ-100 Data Explorers Optimized Index offers investors the liquidity of the NASDAQ-100 Index components but with extra measures of liquidity,” Nasdaq OMX Executive Vice President John Jacobs said in a release.

“We believe the application of our screening methodology to the NASDAQ-100 Data Explorers Optimized Index will help investors improve liquidity and manage risk,” Data Explorers CEO Donal Smith added in the release. “We are confident this new index will become a model for the construction of other new indexes and the basis of exchange-traded products.”

The index is the first in what the two companies say is a planned series of optimized indexes. The optimized Nasdaq-100 index will be rebalanced quarterly.

 

ETF.COM CHANNELS

Learn why commodity ETFs are an essential part of a diversified portfolio with our Commodity ETFs channel.

Learn why bond ETFs are an essential part of a diversified portfolio with our bond ETF channel.

ETF DAILY DATA

The ETF tracking the Dow Jones industrial average was the inflows leader on Thursday, Feb. 4.

ETF issuers saw little movement in their asset totals on Thursday, Feb. 4.

ETF.COM ANALYST BLOGS

By Matt Hougan

Here's why you should attend the largest ETF conference in the world next month.

By Dave Nadig

Barclays built in a premium to this exchange-traded note, so back away.

By Sumit Roy

Why this probably isn't the start of a bear market.

By Dave Nadig

Many challenges ahead for the rapidly growing industry.

ETF INDUSTRY PERSPECTIVE

By Heidi Richardson

Opportunities in Germany and the eurozone.

By Shirish Malekar

How to protect your portfolio with liquid alts.