Understanding the FT Wilshire 5000 Index (FTW5000)
The FT Wilshire 5000 Index (FTW5000), known as the ultimate barometer of the American equity market, is a market-capitalization-weighted index of all U.S. equities with readily available price data. Previously known as the Wilshire 5000 Total Market Index before its stylish rebranding in 2021 courtesy of a partnership with The Financial Times, it endeavors to embody the investment realm comprehensively. Dubbed after the ambitious number of stocks it aimed to include at its inception, the index historically inflated to over 7,500 stocks in 1998 but has since slimmed down to a sleeker figure of 3,687 as of the end of 2021.
Special Considerations
The FTW5000’s journey through the index fashion world saw it changing partnership from being part of the “Dow Jones” label to its current co-branding with The Financial Times, which sounds decidedly more cosmopolitan. This partnership also birthed six other indices, covering various cap-sizes from mega to micro, ensuring that no stock is left behind. This index family reunion helps provide a more segmented view of the market based on company sizes, enhancing the bespoke investment strategies for the discerning investor.
Historical Milestones
Let’s wind the clocks back to 1974, the year when Wilshire Associates decided they needed their own show in town—the FT Wilshire 5000 Index was born. Fast forward to April 2004, and it had a short stint under the Dow Jones umbrella, rebranding as the “Dow Jones Wilshire 5000” before returning to its Wilshire roots in 2009. The index touched a kaleidoscopic high of 14,751.64 points in March 2000, only to later play a dramatic game of snakes and ladders during the financial crises and bull markets that followed.
Moving Forward
As it stands, the FT Wilshire 5000 Index paints a broad stroke across the U.S. market landscape, attempting to include every scribble and dot that represents the publicly traded companies. Although it no longer features a full 5,000+ stocks, it continues to provide a panoramic view of market trends, movements, and the underlying economic tapestry, making it one of the go-to indices for investors who crave a comprehensive snapshot.
Related Terms
- Market Capitalization: The total market value of a company’s outstanding shares. It is calculated by multiplying the current market price of one share by the total number of outstanding shares.
- Micro Cap Index: An index that represents the micro-cap segment of the market, typically encompassing companies with smaller market capitalizations.
- Equity Market: A market in which shares of publicly held companies are issued and traded, either through exchanges or over-the-counter markets.
Suggested Books for Further Study
- “A Random Walk Down Wall Street” by Burton Malkiel - Provides insights into the stock market and the efficiency of market indices.
- “The Intelligent Investor” by Benjamin Graham - A must-read for understanding value investing and essential market principles.
- “Stocks for the Long Run” by Jeremy Siegel - Offers an analysis of the historical performance of various market indices and their impact on long-term investing strategies.
In the grand tapestry of financial indices, the FT Wilshire 5000 Index stands not merely as a figure but as a storyteller, weaving the threads of thousands of U.S. companies into a narrative of national economic trends and investor sentiment. If you wish to capture the spirit of the American market in one glance, the FTW5000 is your looking glass.
