NASDAQ vs Dow Jones: Index comparison for Indian portfolios
Indian investors exploring the US markets often face a common question. Should they invest in the NASDAQ or the Dow Jones Industrial Average? Both indices track American stocks, but they differ in structure, risk, and return potential.
The NASDAQ vs Dow Jones debate matters more in 2026 than ever before. The Dow Jones just crossed the historic 50,000 mark in February 2026 after a massive 1,207-point single-day rally. Meanwhile, the NASDAQ dipped on an AI-driven software selloff that wiped $285 billion from tech-adjacent stocks. These opposite moves reveal how different these two indices truly are.
This guide breaks down differences in index composition, historical returns, sector exposure, volatility, and dividends. By the end, you will know which index better fits your Indian portfolio — or whether you need both. Whether you are a first-time international investor or an experienced allocator, understanding these two benchmarks helps you make smarter decisions with your overseas capital.
How NASDAQ and Dow Jones are built differently
The most important difference in index composition lies in what each index holds and how it weights those holdings.
The NASDAQ 100 tracks the 100 largest non-financial companies listed on the NASDAQ exchange. It uses a modified market-cap weighting method. This means larger companies like Apple, Nvidia, and Microsoft carry far more weight in the index. The top 10 stocks alone account for nearly 70% of the index's total weight.
The Dow Jones Industrial Average holds just 30 blue-chip American companies. A committee at S&P Dow Jones Indices handpicks each member based on reputation, industry leadership, and growth history. The Dow uses price-weighting, meaning a stock's share price determines its influence. Goldman Sachs commands roughly 11.4% of the Dow simply because its share price exceeds $900.
This weighting method yields an unexpected result. NVIDIA holds a $3 trillion market cap but carries less weight in the Dow than Goldman Sachs, which is worth roughly $167 billion. In the NASDAQ 100, Nvidia leads the index with a 12.5% weight, driven by its market cap.
The NASDAQ reconstitutes each December, adding and removing companies based on strict size rules. The Dow changes far less often — its most recent update added Nvidia and Sherwin-Williams in November 2024.
For Indian investors, this structural gap matters. Investing in US stocks through ETFs tied to these indices gives you exposure to very different slices of the American economy.
Historical performance comparison: Growth vs stability
A historical performance comparison over the past two decades shows the NASDAQ clearly ahead on total returns — with important caveats.
The NASDAQ 100 delivered approximately 22.6% annualised returns over the last 10 years. The Dow Jones returned roughly 11.3% annualised over the same period. Over the past 20 years, the gap has widened further. The NASDAQ averaged about 16% per year compared to the Dow's 6.7%.
In 2025, the NASDAQ 100 gained 20.2% while the Dow rose 13%. Both indices completed their third straight year of double-digit gains — a streak not seen since the late 1990s.
However, 2026 tells a different story. Through early February, the Dow surged 4.3% while the NASDAQ 100 fell 2.8%. This rotation from growth to value stocks shows that the NASDAQ does not win every year. The Dow's diversified sector mix helped it capture gains from industrials, financials, and healthcare during this shift. Market breadth also widened sharply — the equal-weight S&P 500 outpaced its cap-weighted version by more than four percentage points in early 2026.
A ₹10 lakh investment in the NASDAQ 100 a decade ago would have grown to roughly ₹75 lakh today (in dollar terms, before forex). The same amount in the Dow would have reached approximately ₹29 lakh. The NASDAQ wins on raw returns, but those gains came with far more risk.
What are the sector differences between these indices
The sector differences between NASDAQ and Dow Jones explain why they behave so differently during market cycles.
Technology accounts for roughly 51% of the NASDAQ 100. Add communication services companies like Alphabet and Meta, and technology-adjacent stocks make up nearly 68% of the total. Consumer-discretionary firms such as Amazon and Tesla account for another 13%. Financials are almost absent at just 0.2% — the NASDAQ 100 excludes financial companies by design.
The Dow Jones presents a nearly opposite picture. Financials lead at 28%, with Goldman Sachs, JPMorgan, American Express, and Visa driving performance. Technology accounts for about 20%. Industrials like Caterpillar and Boeing account forsuch as 15%. Healthcare names such as UnitedHealth and Johnson & Johnson account for 12%.
This contrast has direct implications for Indian investors. Most Indian portfolios already carry significant IT exposure through companies such as Infosys, TCS, and Wipro. Adding NASDAQ 100 exposure doubles down on technology. The Dow offers genuinely different factor exposure — mature financials, industrials, and healthcare companies that are underrepresented in Indian equity markets.
When evaluating which index better suits your needs, consider your existing domestic allocation first.
Is Dow Jones less risky? Volatility numbers tell the truth
The NASDAQ is significantly more volatile than the Dow by every standard measure. This volatility is the price investors pay for higher long-term returns.
The NASDAQ 100 shows an annualised standard deviation of roughly 24% over the past 30 years. The Dow Jones is near 15–17%. In simpler terms, the NASDAQ swings about 50% more than the Dow in any given year.
Maximum drawdowns reveal the true cost of NASDAQ's growth orientation. During the dot-com crash, the NASDAQ 100 plunged 83% from peak to trough. It took nearly 14.5 years to recover that loss. The Dow's worst fall was 51.9% during the 2008 financial crisis, with a much faster recovery.
In the 2022 bear market, the NASDAQ 100 fell 33.7% while the Dow dropped only 20.4%. That 13-percentage-point gap matters enormously for investors who need to stay calm during downturns.
The NASDAQ 100 carries a beta of roughly 1.09 to 1.18 against the S&P 500, amplifying broad market moves. The Dow's beta ranges from 0.85 to 0.95, dampening volatility relative to the wider market. Current one-month rolling volatility shows the NASDAQ is about 32% more volatile than the Dow.
For Indian investors with a 7–10-year horizon, NASDAQ volatility is manageable. For those closer to retirement or with lower risk tolerance, the Dow offers a smoother ride.
Dividend yield comparison: Income vs growth
A dividend yield comparison further separates these two indices. The Dow Jones yields approximately 1.4% through the DIA ETF—the NASDAQ 100 yields just 0.46% through the QQQ ETF — roughly one-third the Dow's payout.
This gap exists because NASDAQ companies reinvest profits into growth rather than distributing them as dividends. Tech giants like Alphabet, Amazon, and Meta only recently started paying dividends. Many NASDAQ 100 members still pay nothing at all.
The Dow's higher yield comes from mature dividend payers like Coca-Cola, Johnson & Johnson, Procter & Gamble, and JPMorgan. These companies generate steady cash flows and return significant portions to shareholders.
Indian investors should note that US dividends are subject to a 25% withholding tax under the India-US tax treaty. You can claim credit for this tax when filing your Indian return using Form 67. After withholding, the Dow's effective yield drops to about 1.05% — still meaningfully higher than the NASDAQ's 0.35%.
For income-focused investors, the Dow holds a clear advantage. For wealth builders focused on total returns over long periods, the NASDAQ's lower yield matters less because capital appreciation drives most of the gains.
How to invest in NASDAQ and Dow Jones from India
Indian investors can access both indices through two main routes: direct US investing and Indian mutual funds.
Direct investing in US stocks through ETFs through platforms like Winvesta lets you buy US-listed funds such as QQQ (NASDAQ 100, 0.18% expense ratio) and DIA (Dow Jones, 0.16% expense ratio).
The Liberalised Remittance Scheme allows up to $250,000 per person annually. Remittances above ₹10 lakh for investments attract a 20% TCS, which you can claim back as a tax credit when filing your ITR.
Indian mutual funds offer a simpler path for NASDAQ exposure—the Motilal Oswal NASDAQ 100 ETF trades on NSE and BSE. If you want the full breakdown on how to invest in NASDAQ from India, several fund-of-funds options remain open, including Kotak NASDAQ 100 FoF (0.24% expense ratio) and Navi NASDAQ 100 FoF (0.16% expense ratio).
However, SEBI's $7 billion overseas investment cap has forced several popular NASDAQ funds to suspend fresh purchases.
Here is a critical gap: no Indian mutual fund or ETF currently tracks the Dow Jones Industrial Average. If you want Dow Jones exposure, you must use the direct investment route through an overseas brokerage account.
Capital gains on US stocks held for more than 24 months qualify as long-term and are taxed at 12.5% for Indian residents. Short-term gains face tax at your income slab rate. All foreign assets must appear in Schedule FA of your income tax return.
The case for holding both indices in your portfolio
Rather than choosing between the two, many Indian investors benefit from holding both indices simultaneously.
The NASDAQ 100 and Dow Jones correlate roughly 0.75 to 0.85 over long periods. This means they move in the same general direction, but diverge meaningfully during sector rotations. February 2026 proved this perfectly — the Dow climbed 4.3% while the NASDAQ fell 2.8% as markets rotated from growth to value stocks.
A 60-40 split favouring the NASDAQ for growth-oriented investors, or a 40-60 split favouring the Dow for conservative investors, creates natural diversification. The NASDAQ contributes long-term capital appreciation and technology exposure. The Dow provides dividend income, lower volatility, and access to financials, industrials, and healthcare.
Indian investors with portfolios already heavy in domestic IT should consider tilting toward the Dow for genuine diversification. Those with portfolios concentrated in banking and industrial stocks may find the NASDAQ provides better complementary exposure.
The strongest approach combines both indices alongside your domestic Indian allocation. This gives you access to different sectors, risk profiles, and income characteristics — all within the American market, the world's deepest and most liquid equity pool. Start with a small allocation, build confidence with the process, and scale up as your understanding of US markets deepens over time.
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.
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Table of Contents
Indian investors exploring the US markets often face a common question. Should they invest in the NASDAQ or the Dow Jones Industrial Average? Both indices track American stocks, but they differ in structure, risk, and return potential.
The NASDAQ vs Dow Jones debate matters more in 2026 than ever before. The Dow Jones just crossed the historic 50,000 mark in February 2026 after a massive 1,207-point single-day rally. Meanwhile, the NASDAQ dipped on an AI-driven software selloff that wiped $285 billion from tech-adjacent stocks. These opposite moves reveal how different these two indices truly are.
This guide breaks down differences in index composition, historical returns, sector exposure, volatility, and dividends. By the end, you will know which index better fits your Indian portfolio — or whether you need both. Whether you are a first-time international investor or an experienced allocator, understanding these two benchmarks helps you make smarter decisions with your overseas capital.
How NASDAQ and Dow Jones are built differently
The most important difference in index composition lies in what each index holds and how it weights those holdings.
The NASDAQ 100 tracks the 100 largest non-financial companies listed on the NASDAQ exchange. It uses a modified market-cap weighting method. This means larger companies like Apple, Nvidia, and Microsoft carry far more weight in the index. The top 10 stocks alone account for nearly 70% of the index's total weight.
The Dow Jones Industrial Average holds just 30 blue-chip American companies. A committee at S&P Dow Jones Indices handpicks each member based on reputation, industry leadership, and growth history. The Dow uses price-weighting, meaning a stock's share price determines its influence. Goldman Sachs commands roughly 11.4% of the Dow simply because its share price exceeds $900.
This weighting method yields an unexpected result. NVIDIA holds a $3 trillion market cap but carries less weight in the Dow than Goldman Sachs, which is worth roughly $167 billion. In the NASDAQ 100, Nvidia leads the index with a 12.5% weight, driven by its market cap.
The NASDAQ reconstitutes each December, adding and removing companies based on strict size rules. The Dow changes far less often — its most recent update added Nvidia and Sherwin-Williams in November 2024.
For Indian investors, this structural gap matters. Investing in US stocks through ETFs tied to these indices gives you exposure to very different slices of the American economy.
Historical performance comparison: Growth vs stability
A historical performance comparison over the past two decades shows the NASDAQ clearly ahead on total returns — with important caveats.
The NASDAQ 100 delivered approximately 22.6% annualised returns over the last 10 years. The Dow Jones returned roughly 11.3% annualised over the same period. Over the past 20 years, the gap has widened further. The NASDAQ averaged about 16% per year compared to the Dow's 6.7%.
In 2025, the NASDAQ 100 gained 20.2% while the Dow rose 13%. Both indices completed their third straight year of double-digit gains — a streak not seen since the late 1990s.
However, 2026 tells a different story. Through early February, the Dow surged 4.3% while the NASDAQ 100 fell 2.8%. This rotation from growth to value stocks shows that the NASDAQ does not win every year. The Dow's diversified sector mix helped it capture gains from industrials, financials, and healthcare during this shift. Market breadth also widened sharply — the equal-weight S&P 500 outpaced its cap-weighted version by more than four percentage points in early 2026.
A ₹10 lakh investment in the NASDAQ 100 a decade ago would have grown to roughly ₹75 lakh today (in dollar terms, before forex). The same amount in the Dow would have reached approximately ₹29 lakh. The NASDAQ wins on raw returns, but those gains came with far more risk.
What are the sector differences between these indices
The sector differences between NASDAQ and Dow Jones explain why they behave so differently during market cycles.
Technology accounts for roughly 51% of the NASDAQ 100. Add communication services companies like Alphabet and Meta, and technology-adjacent stocks make up nearly 68% of the total. Consumer-discretionary firms such as Amazon and Tesla account for another 13%. Financials are almost absent at just 0.2% — the NASDAQ 100 excludes financial companies by design.
The Dow Jones presents a nearly opposite picture. Financials lead at 28%, with Goldman Sachs, JPMorgan, American Express, and Visa driving performance. Technology accounts for about 20%. Industrials like Caterpillar and Boeing account forsuch as 15%. Healthcare names such as UnitedHealth and Johnson & Johnson account for 12%.
This contrast has direct implications for Indian investors. Most Indian portfolios already carry significant IT exposure through companies such as Infosys, TCS, and Wipro. Adding NASDAQ 100 exposure doubles down on technology. The Dow offers genuinely different factor exposure — mature financials, industrials, and healthcare companies that are underrepresented in Indian equity markets.
When evaluating which index better suits your needs, consider your existing domestic allocation first.
Is Dow Jones less risky? Volatility numbers tell the truth
The NASDAQ is significantly more volatile than the Dow by every standard measure. This volatility is the price investors pay for higher long-term returns.
The NASDAQ 100 shows an annualised standard deviation of roughly 24% over the past 30 years. The Dow Jones is near 15–17%. In simpler terms, the NASDAQ swings about 50% more than the Dow in any given year.
Maximum drawdowns reveal the true cost of NASDAQ's growth orientation. During the dot-com crash, the NASDAQ 100 plunged 83% from peak to trough. It took nearly 14.5 years to recover that loss. The Dow's worst fall was 51.9% during the 2008 financial crisis, with a much faster recovery.
In the 2022 bear market, the NASDAQ 100 fell 33.7% while the Dow dropped only 20.4%. That 13-percentage-point gap matters enormously for investors who need to stay calm during downturns.
The NASDAQ 100 carries a beta of roughly 1.09 to 1.18 against the S&P 500, amplifying broad market moves. The Dow's beta ranges from 0.85 to 0.95, dampening volatility relative to the wider market. Current one-month rolling volatility shows the NASDAQ is about 32% more volatile than the Dow.
For Indian investors with a 7–10-year horizon, NASDAQ volatility is manageable. For those closer to retirement or with lower risk tolerance, the Dow offers a smoother ride.
Dividend yield comparison: Income vs growth
A dividend yield comparison further separates these two indices. The Dow Jones yields approximately 1.4% through the DIA ETF—the NASDAQ 100 yields just 0.46% through the QQQ ETF — roughly one-third the Dow's payout.
This gap exists because NASDAQ companies reinvest profits into growth rather than distributing them as dividends. Tech giants like Alphabet, Amazon, and Meta only recently started paying dividends. Many NASDAQ 100 members still pay nothing at all.
The Dow's higher yield comes from mature dividend payers like Coca-Cola, Johnson & Johnson, Procter & Gamble, and JPMorgan. These companies generate steady cash flows and return significant portions to shareholders.
Indian investors should note that US dividends are subject to a 25% withholding tax under the India-US tax treaty. You can claim credit for this tax when filing your Indian return using Form 67. After withholding, the Dow's effective yield drops to about 1.05% — still meaningfully higher than the NASDAQ's 0.35%.
For income-focused investors, the Dow holds a clear advantage. For wealth builders focused on total returns over long periods, the NASDAQ's lower yield matters less because capital appreciation drives most of the gains.
How to invest in NASDAQ and Dow Jones from India
Indian investors can access both indices through two main routes: direct US investing and Indian mutual funds.
Direct investing in US stocks through ETFs through platforms like Winvesta lets you buy US-listed funds such as QQQ (NASDAQ 100, 0.18% expense ratio) and DIA (Dow Jones, 0.16% expense ratio).
The Liberalised Remittance Scheme allows up to $250,000 per person annually. Remittances above ₹10 lakh for investments attract a 20% TCS, which you can claim back as a tax credit when filing your ITR.
Indian mutual funds offer a simpler path for NASDAQ exposure—the Motilal Oswal NASDAQ 100 ETF trades on NSE and BSE. If you want the full breakdown on how to invest in NASDAQ from India, several fund-of-funds options remain open, including Kotak NASDAQ 100 FoF (0.24% expense ratio) and Navi NASDAQ 100 FoF (0.16% expense ratio).
However, SEBI's $7 billion overseas investment cap has forced several popular NASDAQ funds to suspend fresh purchases.
Here is a critical gap: no Indian mutual fund or ETF currently tracks the Dow Jones Industrial Average. If you want Dow Jones exposure, you must use the direct investment route through an overseas brokerage account.
Capital gains on US stocks held for more than 24 months qualify as long-term and are taxed at 12.5% for Indian residents. Short-term gains face tax at your income slab rate. All foreign assets must appear in Schedule FA of your income tax return.
The case for holding both indices in your portfolio
Rather than choosing between the two, many Indian investors benefit from holding both indices simultaneously.
The NASDAQ 100 and Dow Jones correlate roughly 0.75 to 0.85 over long periods. This means they move in the same general direction, but diverge meaningfully during sector rotations. February 2026 proved this perfectly — the Dow climbed 4.3% while the NASDAQ fell 2.8% as markets rotated from growth to value stocks.
A 60-40 split favouring the NASDAQ for growth-oriented investors, or a 40-60 split favouring the Dow for conservative investors, creates natural diversification. The NASDAQ contributes long-term capital appreciation and technology exposure. The Dow provides dividend income, lower volatility, and access to financials, industrials, and healthcare.
Indian investors with portfolios already heavy in domestic IT should consider tilting toward the Dow for genuine diversification. Those with portfolios concentrated in banking and industrial stocks may find the NASDAQ provides better complementary exposure.
The strongest approach combines both indices alongside your domestic Indian allocation. This gives you access to different sectors, risk profiles, and income characteristics — all within the American market, the world's deepest and most liquid equity pool. Start with a small allocation, build confidence with the process, and scale up as your understanding of US markets deepens over time.
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.
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Invest in 11,000+ US stocks & ETFs
