What is the Dow Jones U.S. Total Market Index?
The Dow Jones U.S. Total Market Index (DWCF) is a market-capitalization-weighted index Dow Jones Indexes maintains that provides broad-based coverage of the U.S. stock market. The Dow Jones U.S. Market Index, considered a total market index, represents the top 95% of the U.S. stock market based on market capitalization.
The Dow Jones U.S. Total Market Index is also known as the "Dow Jones U.S. Index." The index includes most stocks, except the very smallest and least-liquid U.S. stocks. The Dow Jones large-cap, mid-cap, small-cap, value, and growth indexes are constructed from the stock constituents of the Dow Jones U.S. Total Market Index.
- The Dow Jones U.S. Market Index (DWCF) is a total market index that represents the top 95% of the U.S. stock market based on market capitalization.
- The DWCF includes about 3,650 US stocks that trade on the U.S. stock exchanges.
- The index does not include foreign securities, exchange-traded products, or other investment companies.
As an extremely broad index, the fund is further sliced by Dow Jones to create distinct sub-indexes that track every major segment of the market, according to stock size, sector, and others. All of the indexes are created and maintained according to an objective and transparent methodology with the fundamental aim of providing reliable, accurate measures of U.S. equity performance.
Understanding the Dow Jones U.S. Total Market Index
Added up, the Dow Jones U.S. Total Market Index includes about 3,650 US stocks that trade on the U.S. stock exchanges; it includes large-, mid-, small- and micro-cap companies. The number does not include foreign securities, exchange-traded products, or other investment companies.
The other most prominent total market indexes besides the Dow Jones U.S. Total Market Index include the Wilshire 5000 Total Market Index and the CRSP US Total Market Index. All three indexes are float-adjusted and capitalization-weighted.
The DWCF vs Broad Market Indexes
Broad market indexes are not total market indexes. They leave out many micro-cap stocks, which are the smallest companies that trade on stock exchanges.
Broad market indexes only include securities with reasonable size and liquidity so that they can be purchased in an institutional size portfolio. Many micro-cap securities don’t trade with enough volume to be efficiently included in products such as index funds and exchange-traded funds (ETF).
The DWCF as a Research Tool
Indexes, like the Dow Jones U.S. Total Market Index, provide useful information and insight, like making it easier to understand past trends and changes in investing patterns. Indexes provide a helpful benchmark for making all types of comparisons, and also provide snapshots of trends, though not a detailed picture.
Indexes react to actual trades, and while investors may trade on the expectation of good or bad news, indexes are mathematical calculations that have nothing to do with emotion. In that respect, stock indexes may be more valuable for providing a historical perspective than they are a means of forecasting future market movement. They can be especially useful for spotting long-term trends.