The value of the index is computed by dividing the total market capitalization of all the stocks in the index by a divisor, which is a constant number that adjusts for stock splits, dividends, spin-offs, and other corporate actions.
The divisor is updated periodically to ensure that the index value is continuous and does not change due to these events. The index value is expressed in US dollars and is updated every 15 seconds during the trading hours.
Why is the DWCF relevant for investors?
The DWCF is relevant for investors because it provides a broad and representative picture of the US stock market, which is the largest and most influential market in the world. The index captures the performance of various sectors, industries, and styles of the US economy, such as large-cap, mid-cap, small-cap, value, and growth.
The index also reflects the impact of major events and trends that affect the US market, such as earnings reports, economic data, monetary policy, geopolitical developments, and technological innovations.
The DWCF can be used by investors for different purposes, such as:
- Benchmarking: The DWCF can be used as a reference point to compare the performance of individual stocks, portfolios, or other indexes. For example, an investor can use the DWCF to evaluate how well their portfolio is diversified across different segments of the US market, or how their portfolio is performing relative to the overall market.
- Investing: The DWCF can be used as a basis for investing in the US stock market, either directly or indirectly. For example, an investor can buy or sell the stocks that are included in the index, or use derivatives such as futures or options to gain exposure to the index. Alternatively, an investor can invest in index funds or exchange-traded funds (ETFs) that track the DWCF, such as the Schwab US Broad Market ETF (SCHB) or the Vanguard Total Stock Market ETF (VTI).
- Researching: The DWCF can be used as a source of information and analysis for the US stock market, either historically or prospectively. For example, an investor can use the DWCF to study the historical returns, volatility, correlations, and trends of the US market, or to forecast the future performance, risks, and opportunities of the US market.
The DWCF is a comprehensive and widely used index that covers 95% of the US stock market by market capitalization. The index is a valuable tool for investors who want to measure, invest in, or research the US stock market.
