New research1 commissioned by Invesco has found a majority (58%) of European institutional investors believe the Nasdaq Next Generation 100 Index will outperform the Nasdaq-100 over the next three years. Of this, more than a quarter (29%) think this is very likely. The Nasdaq Next Generation index, launched in August last year, offers targeted exposure to the eligible 101st to 200th largest securities listed on the Nasdaq stock market.
Three fifths (62%) of respondents to the survey agreed that the technology boom has only just begun and the constituent firms of the Nasdaq Next Generation index are best placed to capitalise. Two thirds (65%) said the firms are focused on exciting new technologies, products and innovation while just over half (54%) said the firms in the index have the potential to outperform significantly given they are smaller in size than those in the Nasdaq-100.
Overall, four fifths (81%) said the Nasdaq Next Generation 100 Index will be popular with institutional investors; of this, 13% said it will be very popular.
Firms listed on the Nasdaq Next Generation 100 index include AstraZeneca, Beyond Meat, Citrix Systems, CrowdStrike, Etsy, First Solar, SS&C Technologies, Take-Two Interactive and Yandex. The constituents are capped at 4% - the most significant holding, CrowdStrike, is currently 2.3% of the index. The largest sectors currently represented are technology (33.7%), consumer discretionary (24.9%), health care (19.4%), industrials (11.6%) and telecoms (5.5%).
According to Invesco’s survey, European institutional investors also remain positive towards the Nasdaq-100 index. Looking ahead over the next three years, more than a third (37%) of respondents believe the Nasdaq-100 will perform ‘significantly’ higher than the previous three years, with a further 48% saying it will perform ‘slightly’ higher. Just 4% say they think it will perform lower. Some 61% of respondents said the constituents of the Nasdaq-100 index are continuing to deliver true innovation and will carry on creating new products, services and markets.
Christopher Mellor, Head of EMEA ETF Equity and Commodities Product Development at Invesco said: “Firms listed on the Nasdaq-100, such as Amazon, Alphabet, Microsoft, Tesla and Zoom, have dominated much of the global business narrative for the past decade – and still are. Through the Nasdaq Next Generation 100 Index, investors can gain exposure to a new generation of fast-growth, dynamic, tech-focused businesses that could dominate over the next decade. It is unsurprising that institutional investors see strong opportunities for growth.
“Our survey also found three quarters of respondents expect ETFs to be popular with institutional investors looking to invest in technology-led firms such as those listed on the Nasdaq Next Generation 100 compared to other investment vehicles. ETFs represent a highly efficient, cost-effective means to gain exposure to such markets and we firmly believe they will become the vehicle of choice for many investors.”
1 100 European institutional investors polled by research firm PureProfile in March 2021. Respondents were based in the UK, Germany, France, Italy, Spain, the Netherlands, and in Nordic countries
