A low cost index fund that replicates the S&P 500 large cap index in the US.
This fund is a passive fund. Like any other passive strategy, it will replicate / mirror the S&P 500 Index holdings in exactly the same ratio.
As a mutual fund, it allows you to invest small amounts and take exposure to the underlying index.
The returns will be subject to tracking error, because of delay in rebalancing and costs.
The Nasdaq 100 fund is also a passive fund which replicates / mirrors the Nasdaq 100 Index. The index represents top 100 non financial stocks listed on the Nasdaq.
The Nasdaq 100 is a more technology focused index and steers clear of financial companies.
Given the limited scope, it can be more concentrated too. The individual weightage to stocks can go up to double digits. Apple currently has a 11% allocation in this index, for example.
In contrast, the S&P 500 Index limits the allocation of the largest 5 index constituents to 7%.
The concentration in Nasdaq 100 also results in a higher volatility than the S&P 500 and as some would argue, higher rewards too.
A well diversified portfolio of some of the well managed companies in the S&P 500 index makes for a compelling option to add some International diversification to your portfolio.