Which Index Delivers Better Growth Over Decades—And At What Cost?
The S&P 500 and Nasdaq-100 are two of the most widely tracked stock indices in the world. Representing distinct sectors and investment styles, they offer different profiles of growth, volatility, and risk. In this analysis, we explore their long-term performance over the past 30 years, their risk-return balance, and how investors might decide between the two based on their personal goals and risk tolerance.
A 30-Year View: Exponential Growth with Differences
Over the past three decades (1995 to 2025), both indices have delivered significant returns—but at very different scales.
- Nasdaq-100: Approximately +3,765%, or 38x growth, with a compound annual growth rate (CAGR) of 13.7%.
- S&P 500: Approximately +1,033%, or 11x growth, with a CAGR of 11.6%.
While both show long-term upward trajectories, Nasdaq-100 has delivered over 3x the total return of the S&P 500—primarily due to its tech-heavy composition, including giants like Apple, Amazon, and Alphabet.
17-Year Performance and Risk Analysis (2007–2025)
| Index | Total Return | CAGR | Annual Volatility |
|---|---|---|---|
| Nasdaq-100 | 1308% | 16.1% | 23.0% |
| S&P 500 | 543% | 11.0% | 20.1% |
Even over shorter timeframes like 17 years, Nasdaq-100 has more than doubled S&P 500's returns. However, its volatility is higher by 2.8 percentage points, reflecting greater exposure to risk.
Notably, daily return correlation between the two indices is high—around 93%—which means they generally move in the same direction, but at different magnitudes.
10-Year Rolling Return Distribution (Past 15 Years)
This table shows the proportion of 10-year periods that yielded returns in specific bands:
| 10-Year CAGR (%) | Nasdaq-100 Share | S&P 500 Share |
|---|---|---|
| -8 to 0 | 15.38% | 15.38% |
| 0 to 5 | 24.18% | 43.96% |
| 5 to 10 | 23.63% | 36.26% |
| 10 to 15 | 30.77% | 19.78% |
| 15+ | 21.43% | 0.00% |
Key takeaways:
- Nasdaq-100 had a much higher portion (21.43%) of 10-year periods with 15%+ annual returns.
- S&P 500 delivered more moderate returns in most cases, with very few high-return decades.
- Maximum 10-year CAGR: Nasdaq-100 hit 21%, while S&P 500 peaked at 14%.
Risk and Volatility Profile
While Nasdaq-100 offers the thrill of high returns, it also exposes investors to greater drawdowns:
- During the 2000 Dot-Com Crash, Nasdaq-100 plunged -81.76%, taking nearly 15 years to fully recover.
- In the 2022 bear market, it again declined more sharply than the S&P 500.
On the other hand, the S&P 500’s more diversified composition (spanning finance, healthcare, energy, and more) results in lower volatility and shallower drawdowns, making it more palatable for risk-averse investors.
1-Year Return Snapshot (As of Q3 2025)
- Nasdaq-100: +18.1%
- S&P 500: +14.8%
Even in recent performance, Nasdaq-100 has maintained a performance edge—though the gap narrows in stable or recovering markets.
Who Should Choose What? Investor Profiles Matter
| Investor Preference | Best Fit | Why |
|---|---|---|
| Stability and diversification | S&P 500 | Broader sector coverage, lower volatility |
| Growth and aggressive risk | Nasdaq-100 | Tech-heavy, high upside potential |
If you prefer steady accumulation, S&P 500 offers resilience across market cycles. But if you’re aiming for higher returns and are willing to ride out bigger swings, Nasdaq-100 may be the better long-term bet.
Summary Table
| Metric | S&P 500 | Nasdaq-100 |
|---|---|---|
| 30-Year Total Return | +1,033% (11x) | +3,765% (38x) |
| 17-Year CAGR | 11.0% | 16.1% |
| 17-Year Volatility | 20.1% | 23.0% |
| Composition | 500 large caps, diversified | 100 tech-heavy stocks |
| Risk Level | Lower | Higher |
| 1-Year Return | +14.8% | +18.1% |
Both indices trend upward over time, but the ride differs. Nasdaq-100 brings more volatility and more opportunity. S&P 500 delivers steadier returns, with less downside risk.
In either case, long-term, consistent investing—especially through dollar-cost averaging—can allow investors to benefit from market growth, regardless of temporary downturns.
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