You probably know about the Standard & Poor's 500, a leading index of 500 premier American companies, an index that we write about all the time here in Fooldom. Check out these articles for more:
- The S&P 500 Index Fund
- Think the Market's Cheap?
- You Can Beat the Market
- Beat the S&P 500
- You're Paying How Much?
But did you realize that there are plenty of other indexes, with each one representing a particular group of companies? Let's review just a few. The most famous one is the Dow Jones Industrial Average ("the Dow"), which includes 30 flagship American giants such as ExxonMobil (NYSE: XOM ) , Wal-Mart (NYSE: WMT ) , Merck (NYSE: MRK ) , Coca-Cola (NYSE: KO ) , and DuPont (NYSE: DD ) . Similarly, the S&P 500 also focuses on large companies, including 500 of America's biggest and best. Here are a few other major indexes:
Russell 1000 Index
A market-cap-weighted index made up of the 1,000 biggest U.S. companies in the Russell 3000 Index, representing about 92% of the value of all companies in the U.S. market.
Russell 2000 Index
A market-cap-weighted index made up of the 2,000 smallest U.S. companies in the Russell 3000 Index. This index is commonly used to measure the performance of the universe of small American companies.
Russell 3000 Index
A market-cap weighted index made up of the 3,000 largest U.S. companies, representing about 98% of the value of all companies in the U.S. market.
Standard & Poor's MidCap 400 Index
A market-capitalization-weighted index composed of 400 companies with market values between roughly $200 million and $25 billion. This index measures performance of midsize American firms.
Wilshire 4500 Equity Index
A benchmark index made up of the Wilshire 5000 Equity Index, excluding the Standard & Poor's 500 Index. For those who own only or primarily S&P 500 index funds, purchasing shares of the Wilshire 4500 would provide exposure to all of the rest of the market. This index contains and measures about 6,500 mid-cap and small companies.
Wilshire 5000 Equity Index
A benchmark index made up of all U.S. stocks regularly traded in the U.S. market. The name Wilshire 5000 is somewhat of a misnomer -- although it was more-or-less accurate at the time of the naming, there are now more than 7,000 companies included. This is a "total market" index.
There are many more indexes. Some are for international regions such as Latin America or the Far East. Others address sectors such as utilities, semiconductors, the Internet, and fried chicken. (Just kidding about the chicken.)
For more information, check out our Mutual Funds area and zero in on our index fund information there.