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Wilshire 5000 Index

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Financial Statistics as of 07/31/01
Total Market Capitalization $13.4 trillion
Average P/E 28.1
Dividend Yield 1.25%

What Is It?

Started in 1974, the Wilshire 5000 is often referred to as the Total Stock Market Index because it seeks to track the returns of practically all publicly traded, U.S.-headquartered stocks that trade on the major exchanges. Although this index is less well known than the others, it is in fact the largest index by market value in the world.

Fun Fact

The Wilshire 5000 is currently composed of more than 6000 companies, but the Wilshire 6307 just doesn't have that certain zing to it, so we're stuck with 5000. Plus, the number changes frequently.

Type of Companies

All U.S.-headquartered equity securities with readily available price data. Stocks traded via the Bulletin Board system (mostly penny stocks and stocks of extremely small companies) are excluded.

Number of Companies

Around 6300. The number fluctuates depending on the number of companies listed on the major exchanges.

Top 10 Weighted Companies as of 7/31/01
General Electric (GE)
Microsoft (MSFT)
Exxon Mobil (XOM)
Pfizer (PFE)
Citigroup (C)
Wal-Mart (WMT)
AOL Time Warner (AOL)
Intel (INTC)
American International Group (AIG)
IBM (IBM)
Industry Composition as of 7/31/01
  # of
cos.		 % of index
Capital Goods 288 4.6%
Consumer Durables 213 3.4%
Consumer Non-Durables 1282 20.3%
Energy 240 3.8%
Finance 1166 18.5%
Materials & Services 1635 25.9%
Technology 1107 17.6%
Transportation 125 2.0%
Utilities 251 4.0%

How It Is Measured

Similar to the S&P 500, the Wilshire 5000 is market-cap weighted giving larger companies more influence over the index movements.

Strengths

The total market index is just that -- an index of all U.S.-based companies traded on the New York, American, and Nasdaq stock exchanges. This makes the Wilshire 5000 the most diverse of any U.S.-based index.

Weaknesses

The 500 largest companies comprise more than 70% of the index's value, so total performance is weighted toward the top few (relatively speaking) companies. The Wilshire 5000 does not contain any foreign companies, and thus measures economic performance in the United States only.

Investing in the Wilshire 5000

Although not as popular as some of the other indexes, this collection of companies is diverse, providing a good base for investors. However, investors in a Wilshire 5000-based index fund should be aware that the expense ratio for a fund containing every listed company is likely to have higher transaction costs than less broad indexes, thus an investor should expect slightly higher fees with a Wilshire 5000 index investment.

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