What is the Dow Jones Total US Stock Market Index and Why Should You Care?

RediksiaMonday, 8 January 2024 | 06:53 GMT+0000
Dow Jones Total US Stock Market Index
Dow Jones Total US Stock Market Index

DIKSIA.COM - If you are looking for a simple way to measure the performance of the US , you might want to consider the Total US Index (DWCF). This index is one of the most comprehensive and widely used benchmarks for the US equity market, covering about 3,741 stocks across all sectors and sizes.

In this article, we will explain what the DWCF is, how it is calculated, and why it is relevant for investors.

What is the DWCF?

The DWCF is a market-capitalization-weighted index that tracks the performance of the top 95% of the US stock market by market capitalization. This means that the index gives more weight to larger and more liquid companies, and less weight to smaller and less liquid ones.

The index includes stocks that trade on the major US stock exchanges, such as the New York Stock Exchange (NYSE), the Nasdaq, and the American Stock Exchange (AMEX). The index does not include foreign securities, exchange-traded products, or other investment companies.

The DWCF was launched in 1992 by Indexes, a division of S&P Dow Jones Indices, which is a joint venture between S&P Global, the CME Group, and News Corp. The index is also known as the “Dow Jones US Index” or the “Wilshire 5000 ”.

The latter name is derived from the fact that the index originally contained nearly 5,000 stocks when it was created in 1974 by Wilshire Associates, a financial services firm. However, the number of stocks in the index has changed over time due to mergers, acquisitions, delistings, and other corporate actions.

How is the DWCF calculated?

The DWCF is calculated using a float-adjusted market capitalization methodology. This means that the index only considers the shares that are available for public trading, and excludes the shares that are held by insiders, strategic partners, or government entities.

The index is rebalanced quarterly, usually in March, June, September, and December, to reflect changes in the market capitalization and composition of the index constituents.