CTA and Nasdaq: Thematic Stock Market Indexes
December 20, 2019
- Author: Jack Cutts
November/December 2019
More articles in this issue:
CTA is known for many things — CES, its standards work, award-winning research and its many policy wins over the years. However, many don’t know that for the past 10 years, CTA and Nasdaq have worked closely together to build out a slate of thematic stock market indexes covering technology. In the intervening years, the performance of these indexes has offered concrete proof that CTA and its technology experts have their fingers on the pulse of what’s next.
It’s been nine years since the initial launch of the index. CTA and Nasdaq now list five thematic indexes covering smartphones, cybersecurity, artificial intelligence (AI), robotics and cloud computing. As the technology subject matter expert, CTA is tasked with reviewing all stocks that compose each of its indexes two to four times each year. During these review periods, company stocks are evaluated based on their importance to or prominence within a given tech theme rather than on their financial performance.
Thematic indexes like those CTA creates are important tools in any investor’s toolkit. By focusing on fully representing all major facets of a technological theme rather than on picking hot stocks, the CTA/Nasdaq indexes offer broad exposure to important technological shifts like AI and cloud computing. Thematic investing can also offer an important hedge against other investment vehicles that are more subject to the whims of the market based on what’s hot right now or what’s being talked about in the financial press.
Since inception, CTA’s AI index has outperformed the S&P 500 by a wide margin, gaining 23% as of this writing.
The Beginning
It all started in 2010 when Nasdaq and CTA teamed up on the Nasdaq CTA Smartphone Index (Ticker: QFON). The index not only captured handset manufacturers and service providers, but also those lesser-known names in the ecosystem like ODMs, communications infrastructure providers and component manufacturers. The early success of this index naturally brought new opportunities to the table.
In 2015, CTA and Nasdaq launched the Nasdaq CTA Cybersecurity Index (Ticker: NQCYBR). Although it seems like an obvious theme for a fund now, in 2015 cybersecurity was just becoming highly investible. As one of the first thematic cybersecurity funds available in the market at the time, the fund took off. Today, the fund covers a broad swath of the cybersecurity industry including consulting companies, managed service providers, identity and access management.
CTA and Nasdaq worked together again in 2017 to launch the Nasdaq CTA Artificial Intelligence & Robotics index (Ticker: NQROBO). Covering over 90 companies, this index bundles together all things AI, robotics and automation and provides an excellent investment vehicle for those looking for exposure to largescale robotics, factory automation, self-driving vehicles and AI in its many forms. CTA and NASDAQ also launched an AI-only derivative of this index in 2018 (Ticker: NQINTEL). Most recently, CTA and Nasdaq collaborated on the ISE CTA Cloud Computing Index featuring over 60 of the top names in cloud computing (Ticker: CPQ).
As the big tent of technology grows, CTA continues to leverage its expertise in a wide array of technical topics proving it’s the best home for technology’s leading brands and innovators.
Join our community of innovators and shape the future of technology.
