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Index Investing: The Wilshire 5000 Total Market Index
If you thought the S&P 500 and Nasdaq Composite Index included a lot of companies the Wilshire 5000 Total Market Index (TMWX) is 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 (NYSE), 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, American Depositary Receipts (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 in the world, it covers virtually all of the public companies in the U.S. |
| 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 fund that represents this index. The only downside is that it will be relatively expensive. |
Next: Index Investing: The Russell 2000 Index
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