Wilshire 5000 Index
What is the Wilshire 5000 Index?
The Wilshire 5000 Index is considered the "total market index." Designed to track the value of the entire stock market, the index was started in 1974 by Wilshire Associates soon after computers made the daily computation of such a large index possible.
The index includes a majority of the common stocks, REITs, and limited partnership shares, traded primarily through NASDAQ OMX or NYSE Euronext or the American Stock Exchange.
How Does the Wilshire 5000 Index Work?
The Wilshire 5000 is comprised of virtually every stock that meets three criteria:
1) The firm's headquarters are based in the U.S.
2) The stock is actively traded on a U.S. exchange.
3) The stock has widely available pricing information (this disqualifies bulletin board, or over-the-counter stocks).
Though the index started with -- as the name implies -- 5,000 firms, it actually contains around 4,000 today. The index is market cap weighted, meaning that the firms with the highest market value account for a larger portion of the index.
Why Does the Wilshire 5000 Index Matter?
The Wilshire 5000 Index is a very easy way to determine the path of the U.S. stock market. Since it includes essentially every public firm, it is highly representative of the overall market.
Because it is so diverse, it is impossible to tell which sectors or asset classes are moving the market (technology, industrial, small-cap, large-cap, etc) by merely looking at the Wilshire 5000. In addition, many people do not own a large number of the small-cap stocks that this index holds, so it may not accurately represent the portfolio mix held by most investors.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.