What Is the Wilshire 5,000 Stock Market Index?
The Wilshire 5,000 Total Market Index is a stock market index that tracks the performance of (nearly) the entirety of the publicly traded U.S. equity market. Like other stock indexes, it is a collection of stocks whose aggregate performance can be used as a sort of barometer for the market. It comprises thousands of American stocks and is considered by many investors and analysts to be the most accurate gauge of the U.S. stock market at large.
The Wilshire 5,000 is so named because, at its inception in 1974, it included around 5,000 stocks. By the end of the 20th century, it grew to include over 7,500 before shrinking back to under 5,000 once again. As of December 31st, 2021, the index included 3,687 stocks.
Because it includes more stocks than other popular bellwether indexes like the S&P 500, the Wilshire 5,000 is one of the most popular benchmarks against which to compare the returns of particular funds or individual portfolios. The index’s ticker symbol is FTW5000.
How Is the Wilshire 5,000 Weighted?
There are actually several versions of the Wilshire 5,000, each with its own weighting protocol. Most commonly, when investors and analysts discuss the index or mention its value, they are referring to the full-cap version, which weighs component companies according to their unadjusted market capitalizations.
- Full Capitalization: The full-cap version of the index weighs component companies by their total market cap (i.e., the total market value of all of their outstanding shares of stock).
- Float-Adjusted Capitalization: The float-adjusted version of the index weighs companies by their float-adjusted market cap, which takes into account the total value of all shares of stock that are available for public trading. This method excludes shares that are “locked away” because they are held by company insiders or governments.
- Equal Weight: This version of the index gives every component company equal weight in the index’s calculation regardless of company size.
What Are the Requirements to Be Listed in the Wilshire 5,000?
In order to be eligible for inclusion in the Wilshire, a stock must meet certain criteria. All included companies must:
- Be headquartered in the United States.
- Trade on an American stock exchange (like the NYSE or Nasdaq)—not an over-the-counter bulletin board (i.e., penny stocks are excluded).
- Make pricing information widely available to the public.
Top 10 Stocks in the Wilshire 5,000 by Market Cap
As of March 2022, the top 10 stocks in the Wilshire 5,000 by market cap were as follows:
- Apple (AAPL)
- Microsoft (MSFT)
- Alphabet Class C (GOOG)
- Alphabet Class A (GOOGL)
- Amazon (AMZN)
- Tesla Motors (TSLA)
- Nividia (NVDA)
- Meta (FB)
- United Health (UNH)
- Visa (V)
Can You Invest in the Wilshire 5,000?
Because the Wilshire 5,000 is a stock index and not a fund, it cannot be invested in directly. There are, however, plenty of funds that, like the Wilshire, track the performance of almost the entire U.S. stock market. Since total market ETFs are usually passively managed, they tend to have relatively low expense ratios.
U.S. Total Stock Market ETFs
What Is the Buffet Indicator (Wilshire-to-GDP Ratio)?
In 2001, famed value investor Warren Buffet stated that the ratio of the market capitalization of all of a country’s stocks to that same country’s GDP (gross domestic product) “is probably the best single measure of where valuations stand at any given moment.”
In other words, comparing the total market value of all publicly traded U.S. stocks to the GDP is a good way to tell if the American equity market is undervalued or overvalued at any given time. As of March 1st, 2022, the Buffet Indicator stood at about 185%, theoretically indicating that American stocks are broadly overvalued.
Frequently Asked Questions (FAQ)
The following are answers to some of the most common questions investors have about the FT Wilshire 5,000 index that were not already addressed in the sections above.
When Was the Wilshire 5,000 Created? Who Manages It?
The Wilshire 5,000 was launched by Wilshire and Associates in 1974. In April of 2004, Dow Jones and Co. partnered with Wilshire and assumed the index’s management, and “Dow Jones” was added to the front of the index’s name. In 2009, this partnership ended, and management was once again assumed by Wilshire and Associates. The index is now partnered with the Financial times and is known as the FT Wilshire 5,000.
What Does the Wilshire 5,000 Measure?
The Wilshire 5,000 measure the market capitalization of all publicly traded, U.S.-based stocks that trade on major exchanges like the NYSE and Nasdaq. It does not measure the market capitalization of privately traded companies or those that trade on the over-the-counter bulletin board market.
How Many Stocks Are Included in the Wilshire 5,000?
As of the end of 2021, 3,687 stocks were included in the index. This number changes as publicly traded stocks are added and/or removed from major stock exchanges.
Does the Wilshire 5,000 Include All U.S. Stocks?
No, the index only includes publicly traded U.S. stocks that trade on major exchanges. Privately traded companies and OTC “pink sheet” stocks are excluded.
What Sectors Does the Wilshire 5,000 Represent?
Because of its massive scope, the Wilshire includes stocks from virtually every sector and industry. Many of the stocks that have the most influence on the index’s value fall into the technology category. In fact, eight of the index’s top ten stocks by market cap are technology companies.
