2021 is nearing its end and investors are going to take stock of how their portfolio has performed against the stock market leading indices. While you have got another few weeks of trading left till the long winter holidays begin in the US stock market, it’s time to catch up and see how you can better the portfolio returns till year-end.
Meanwhile the Covid fears are still lingering on and the Fed tapering has also begun. How the interest rates will move is subject to the Fed taking decisions at the appropriate time. The bottom line will still remain the same – how far the inflation and subsequently the yield, will have any impact on the economic growth and the corporate earnings.
S&P 500, Dow 300 and Nasdaq 100 are the three leading US indices to look at for adding or buying new stocks that may witness corrections in the near term volatile market.
S&P 500 is up by 25.08 per cent YTD and by 32.06 per cent over the last 12 months while Nasdaq 100 is up by 28.59 per cent YTD and by 39.20 per cent over the last 12 months and Dow 30 is up by 16.32 per cent YTD and by 21.66 per cent over the last 12 months.
S&P 500 is considered to be the top-most single indicator of large-cap US stocks. S&P 500 Index includes nearly 500 leading corporates across about 11 sectors and covers about 80 per cent of the market capitalization of US stock exchanges. The top three sectors in the S&P 500 are Information Technology, Health Care and Communication Services totaling about 50 per cent of the index. If you want to own the prime stocks of the S&P 500 index, the top three stocks are Microsoft, Apple and Amazon by index weightage.
The Nasdaq 100 is a large-cap index and includes one of the largest domestic and international non-financial companies listed on the Nasdaq Stock Market based on market capitalization. Some of the world’s most innovative companies including Apple, Microsoft, Starbucks, Google, Intel, and Tesla are listed on Nasdaq 100.
While Nasdaq is an Information Technology heavy index, the S&P 500 Index is a much broad based index. There are 100 stocks listed on Nasdaq whole on S&P 500 Index, there are 500 stocks thus giving a much diversified flavour to those who want to diversify their international portfolio. On the other hand, the Dow Jones consists of top 30 blue-chip companies but unlike some of the leading indices, it represents companies that are only based in the US.
Staying diversified and holding some cash for better opportunities is one of the ways to build a strong portfolio for a long term. For investors, such periods of volatility may bring in opportunities to pick quality stocks or top US ETFs for the long term portfolio.