NASDAQ 100 Changes

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On December 10, 2021, Nasdaq announced the annual reconstitution of the Nasdaq-100 Index. The following six companies will be added on Monday the 20th: Airbnb, Inc. (Nasdaq: ABNB), Fortinet, Inc. (Nasdaq: FTNT), Palo Alto Networks, Inc. (Nasdaq: PANW), Lucid Group, Inc. (Nasdaq: LCID), Zscaler, Inc. (Nasdaq: ZS), Datadog, Inc. (Nasdaq: DDOG). The following six companies will be removed from the Index: CDW Corporation (Nasdaq: CDW), Fox Corporation (Nasdaq: FOXA/FOX), Cerner Corporation (Nasdaq: CERN), Check Point Software Technologies Ltd. (Nasdaq: CHKP), Trip.com Group Limited (Nasdaq: TCOM), Incyte Corporation (Nasdaq: INCY).

I found an ETF that includes 3 of the companies being added. The ETF is First Trust Nasdaq Cybersecurity ETF (CIBR). This fund has a low .60% expense ratio and has gained 17% YTD. The 3 companies that are in this ETF’s holdings are Fortinet, Palo Alto Networks, and Zscaler. Typically, companies will see a short-term stock price increase as funds that track the Nasdaq 100 update their holdings to include the changes. Of course, nothing in the stock market is guaranteed. CIBR was at $56 in early November and is trading at around $51 as of today. There are several other cybersecurity ETFs out there, but I like this one because of its holdings and solid performance over the past year. The FED announced plans to raise interest rates 3 times in 2022. The increases will likely be gradual .25% or less increments as needed to control inflation. The Nasdaq is up about 17% for the year, similar to the CIBR ETF. Maybe not the best time to invest in the Nasdaq, but I don’t think the need for cybersecurity software is going to go away in the coming year.

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