I’ve recently been comparing various long term stock market indexes and noticed something that I wasn’t aware of. I had no idea that the Nasdaq 100 has had such a big performance lead over the S&P 500 over the long term. I’ve put together a chart, linked at the bottom of this post, showing the Nasdaq 100’s price return (i.e. no dividends re-invested) since its January 1985 inception, matched up with the S&P 500’s total return, the S&P 500’s price return, the Russell 2000’s total return, and the Russell 2000’s price return.
I’ve added all of these to the chart so that there’s no mistaking the data that are being presented. Usually, you’d just compare oranges to oranges (TR to TR or PR to PR), but, unfortunately, Morningstar doesn’t seem to make available the total return data for the Nasdaq 100, so, all we have to work with are the price return data. I also can’t find a long term source for the NDX TR anywhere else (Nasdaq’s official site refers to this data set as the XNDX, but they only offer 10 years worth of data points.) To be sure, I’ve double checked shorter term sources from elsewhere, and the following does seem to be, at least nominally speaking, just the price return data for the Nasdaq 100.
There also seems to be some differences between Morningstar’s Growth plot and Price plot that goes further than just simply a difference between a logarithmic and a linear projection, but I haven’t figured out just what this difference is yet, and I don’t think it interferes with this analysis, but please let me know if it does.
Anyway, the chart basically speaks for itself, and appears to show that the Nasdaq 100 has thoroughly dominated the S&P 500 over its lifetime, more so than even just the price return data would indicate, and I had no idea that this was the case. (I obviously don’t do this for a living.) Am I missing something? Do people expect the NDX to revert back to a weaker long term peformance that would place it more in line with the S&P 500? Thoughts from those more knowledgeable on this topic would be appreciated.
Here’s the chart: http://tinyurl.com/hzor4xy