Index Investing Tutorial
The Wilshire 5000 Total Market Index
(formerly the Wilshire 5000 Equity Index)
If you thought the S&P 500 and NASDAQ Composite Index included a lot of companies ... well, here's an even larger one. Contrary to what its name suggests, the Wilshire 5000 Index contains over 6,500 stocks that trade in the U.S. Investors often refer to the Wilshire as the "total market index" because it covers such a wide variety of shares.
| Created By: |
Wilshire Associates in 1980. |
| Number of Companies: |
6,500+ |
| Types of Companies: |
There is no discrimination by industry. It includes all New York Stock Exchange, and most of the NASDAQ and Amex issues. |
| Selection Criteria: |
All U.S. headquartered equity securities with readily available price data are included. It does not include foreign issues, ADRs or stocks that don't have readily available price data. |
| How it's Calculated: |
The Wilshire Total Market Index is market-capitalization weighted. |
Advantages: Easily the most diversified index, it pretty much covers all the public companies in the United States .
Disadvantages: The Wilshire only contains companies headquartered in the U.S. , leaving out many strong foreign companies. It is also similar to the S&P 500 in the sense that the top 10% of the companies in the index account for over 75% or so of the index's value.
Investing: You can buy an index mutual fund that represents this index. A downside is that it has a relatively high expense ratio for an index fund.