The Nasdaq 100is filled with America’s biggest and best tech companies. While most investors follow S&P500this growth rate has actually performed significantly better over the past five years. Fortunately for UK investors, there are a number of platforms to track the indexes listed on the London Stock Exchange. In other words, British investors can easily take advantage of the profits of American tech giants.

Nasdaq’s performance was exemplary. However, it should be noted that this journey has also been quite volatile, especially compared to indices such as FTSE100 and even FTSE250. Nevertheless, investors who weathered the storm achieved quite significant returns.

So how much could they have made if they invested £5,000 in a low-cost index tracker in December 2019?

Nasdaq Five-Year Return

At the beginning of December 2019, the Nasdaq 100 index was at around 8,400 points. However, because technology stocks are among the most volatile and steep, they quickly dropped to below 7,000 in the months that the pandemic gripped the world.

While tech stocks recovered quickly, rising interest rates and inflation caused them all to fall again during the stock market correction in 2022. In fact, the Nasdaq 100 saw another 30% decline during that period. As already mentioned, this is a variable index.

However, even with all this volatility, the index currently stands at just 21,000 points. This means that investors have achieved an impressive return of 150% over the last five years. This profit increases to 160% after taking into account dividends.

For comparison, the S&P 500 rose just under 110% over the same period. This means that investors who put £5,000 into the Nasdaq 100 five years ago now have £13,000, compared with the £10,500 provided by the S&P 500.

What drives returns?

Nasdaq is a market capitalization weighted index. This means that the largest companies have the greatest impact on its results. And currently, the five largest companies account for almost 35% of the index’s gains. The biggest of them is Apple (NASDAQ:AAPL).

The consumer technology giant needs no introduction. The company itself significantly outperformed its parent index, generating a 252% gain even before dividends were taken into account.

As inflation cools, analysts are forecasting a keen boost in consumer electronics spending next year, calling for a fresh wave of spending on mobile device upgrades. In tiny, the company is next iPhone can be prepared to be pulled off the shelves, especially with improved artificial intelligence (AI) capabilities. Combined with a flourishing services segment, including digital payments, this growth may be just the tip of the iceberg in the long run.

However, the company is not without its flaws. Due to its robust dependence on the Chinese market, American business must remain favorable to the Chinese government. And this may prove more tough under the presidency of Trump, whose anti-China stance is not entirely secret.

Apple isn’t the only company driving returns on the Nasdaq 100. There are plenty of other companies trading at high multiples in anticipation of future growth. As such, the index’s reputation for volatility is unlikely to change anytime soon.