When I first started looking into index fund investing, I heard a lot about the S&P 500, but much less about the S&P 100. As I dug deeper, I realized the S&P 100 index—and the funds that track it—offer something unique: concentrated exposure to America’s corporate giants with greater stability and lower volatility. In this article, I’ll walk you through everything you need to know about 100 index fund investment. I’ll cover how it works, what makes it different from other indexes, how to evaluate returns, and whether it deserves a place in your portfolio.
What Is the S&P 100 Index?
The S&P 100 is a subset of the broader S&P 500 index. It includes 100 of the largest and most established companies in the United States. These are the big players—companies like Apple, Microsoft, ExxonMobil, and Johnson & Johnson.
These firms are selected based on their market capitalization and liquidity. The index is managed by S&P Dow Jones Indices, and it’s market-cap weighted. That means larger companies have a bigger influence on the index’s performance.
Key Features of the S&P 100
| Feature | S&P 100 |
|---|---|
| Number of Constituents | 100 |
| Index Weighting Method | Market Capitalization Weighted |
| Rebalancing Frequency | Quarterly |
| Selection Criteria | Market cap, liquidity |
| Average Market Cap (2024) | $310 billion |
| Sector Representation | Broad, but tilted toward tech |
Compared to the S&P 500, the S&P 100 focuses more on mega-cap stocks. These companies are considered stable, well-capitalized, and often multinational.
What Is a 100 Index Fund?
A 100 index fund is a mutual fund or ETF that aims to replicate the performance of the S&P 100 index. It does so by either directly purchasing all the securities in the index or using a sampling method to mimic its performance.
Popular examples include:
- iShares S&P 100 ETF (OEF)
- Invesco S&P 100 Equal Weight ETF (EQWL)
These funds are passively managed, which means they don’t try to beat the market but rather mirror the index. This generally translates into lower fees and more consistent performance over the long term.
Why I Considered a 100 Index Fund in My Portfolio
When I started allocating more toward equity index funds, I realized I needed to decide between broad exposure and concentrated quality. The S&P 500 gives you broad exposure to 500 companies, including mid-cap stocks. But sometimes, broader exposure means increased volatility and inclusion of weaker companies.
On the other hand, the S&P 100 focuses on quality over quantity. Here’s how I viewed the trade-off.
Comparison: S&P 100 vs S&P 500
| Metric | S&P 100 | S&P 500 |
|---|---|---|
| Companies Included | 100 | 500 |
| Average Market Cap | Higher | Lower |
| Volatility | Lower | Higher |
| Dividend Yield (avg.) | ~1.6% | ~1.5% |
| Annualized Return (10y) | 12.3% | 11.8% |
| Expense Ratio (OEF) | 0.20% | 0.03% (VOO) |
The S&P 100 has historically provided slightly better risk-adjusted returns, though the difference is not always dramatic. However, the lower volatility and larger market caps appealed to my preference for steadier growth.
How 100 Index Fund Investment Works
Let’s break this down.
When you invest in a 100 index fund, you’re essentially buying a tiny piece of 100 large-cap companies. If the fund is market-cap weighted (like OEF), companies like Apple and Microsoft will take up a large chunk of your investment.
If it’s equally weighted (like EQWL), each company receives the same weight regardless of size. This changes the return dynamics and diversification exposure.
Example Calculation
Let’s say I invested $10,000 into the iShares S&P 100 ETF (OEF), which is market-cap weighted. As of early 2025, the top five holdings look something like this:
| Company | Weight in Index (%) | Investment Amount |
|---|---|---|
| Apple | 8.2% | $820 |
| Microsoft | 7.5% | $750 |
| Amazon | 6.3% | $630 |
| Nvidia | 5.8% | $580 |
| Alphabet | 4.9% | $490 |
The rest of the $10,000 is spread across 95 other companies. This weighting provides strong exposure to dominant tech firms while still giving you some diversification.
Risk and Reward: Historical Data
To understand what I could reasonably expect from a 100 index fund, I looked at historical returns.
Annualized Total Returns (as of Dec 2024)
| Period | S&P 100 (OEF) | S&P 500 (VOO) |
|---|---|---|
| 1-Year | 22.4% | 21.1% |
| 3-Year | 9.8% | 9.3% |
| 5-Year | 13.5% | 12.9% |
| 10-Year | 12.3% | 11.8% |
While past performance doesn’t guarantee future results, the S&P 100 has delivered slightly better returns during bull markets and has been less volatile during corrections.
How to Evaluate Fund Performance
When I evaluate a 100 index fund, I look beyond just past returns. Here are the key metrics I use:
- Expense Ratio – Lower is better. OEF’s 0.20% is acceptable but not the lowest.
- Tracking Error – This tells me how closely the fund tracks the index.
- Dividend Yield – Adds to total return, especially if reinvested.
- Beta – Measures volatility. OEF has a beta of ~0.95, indicating slightly less volatility than the market.
The Math Behind Compound Growth
Understanding the math helped me stay the course during volatile times. Suppose I invest $10,000 and expect a 12% annual return.
A = P(1 + r)^t
Where:
A = Final amount
P = Initial principal ($10,000)
r = Annual return (0.12)
t = Time in years (10)
So after 10 years, that $10,000 could grow to over $31,000 without me doing anything else. That’s the power of passive investing.
Tax Considerations
100 index funds are generally tax-efficient because of low turnover. However, I still keep the following in mind:
- Qualified dividends are taxed at long-term capital gains rates (0%, 15%, or 20%)
- Capital gains from selling shares are only taxed when realized
- Holding these funds in a Roth IRA or traditional IRA can eliminate or defer taxes
I usually hold my index funds in tax-advantaged accounts whenever possible.
Sector Exposure Breakdown
One thing I also look at is the sector breakdown. Since the S&P 100 is top-heavy, it skews toward certain industries.
Sector Allocation (S&P 100 as of Q1 2025)
| Sector | Allocation (%) |
|---|---|
| Information Tech | 35% |
| Health Care | 14% |
| Financials | 12% |
| Communication | 10% |
| Consumer Discretionary | 9% |
| Industrials | 7% |
| Energy | 5% |
| Others | 8% |
Tech exposure is high. This works well during tech booms but can be risky during tech corrections. I balance this by holding value-oriented ETFs elsewhere in my portfolio.
Who Should Invest in a 100 Index Fund?
Based on my experience, a 100 index fund makes sense for:
- Investors seeking lower volatility than the full S&P 500
- Those who prefer exposure to mega-cap stocks
- People looking for a long-term, low-maintenance investment
However, it may not be ideal for:
- Investors wanting exposure to small or mid-cap companies
- Those seeking higher dividends
- People looking for contrarian or actively managed strategies
Real-World Case: OEF vs EQWL
To understand how different versions of the S&P 100 index perform, I looked at two ETFs:
- OEF – Market cap-weighted
- EQWL – Equal-weighted
5-Year Return Comparison (2019–2024)
| Year | OEF (%) | EQWL (%) |
|---|---|---|
| 2019 | 31.4 | 29.2 |
| 2020 | 16.1 | 13.7 |
| 2021 | 27.9 | 24.3 |
| 2022 | -12.4 | -14.6 |
| 2023 | 21.8 | 18.5 |
OEF outperformed EQWL during strong tech years because tech giants dominate the cap-weighted index. EQWL provided better diversification but didn’t match OEF’s upside in growth cycles.
Final Thoughts
Investing in a 100 index fund gave me peace of mind. It offered exposure to America’s biggest and most resilient companies without the need to analyze individual stocks. I don’t need to predict winners or time the market. I just invest consistently, reinvest dividends, and let time do the work.
While it’s not the only index fund I own, it’s one of the core holdings in my long-term strategy. If you’re looking for a simple yet powerful way to invest in the U.S. stock market, I believe a 100 index fund is worth serious consideration.
