Wilshire 5000 index is a market capitalization weighted index that tries to track returns of all publicly traded stocks in the United States. Wilshire 5000 index is created in 1974 by Wilshire Associates and is the largest index in the world, measured my market value, comprised of more than 6300 stocks.
A company must meet 3 criteria in order to participate in Wilshire 5000 index: to be based in United States, that its stocks are actively traded on US exchange and that stock’s price information are widely available.
One of the great drawbacks of Wilshire 5000 index is its size. Because it is a market capitalization-weighted index with more than 70% of its value comprised of 500 largest companies, total performance of the index depends on the performance of “few” biggest companies. This is the reason it is considered “over-diverse,” and less known than others are.
Wilshire 5000 index is often called total market index.
