What Is the Percentage of a Large and Small Cap in the Total Stock Index?
Original post by Jonathan Langsdorf of Demand Media
A total stock market index tracks the share price values of all of the stocks listed on the U.S. stock exchanges. The index is a representation of the total value of the U.S. stock market. The Wilshire 5000 total market index includes stocks of all valuations from the largest large caps to the smallest small caps.
Number of Stocks
A handful of different stock indexes can be classified as total stock market indexes. Included in the group would be the Russell 3000, the MSCI U.S. Broad Market Index and the Dow Jones U.S. Total Stock Market Index. These stock market indexes track 3,000 to 3,800 stock prices. The Wilshire 5000 index provides the broadest stock market coverage, tracking more than 5,000 stocks from the largest large cap companies down to very small micro-cap stocks.
Market Cap Weighted
The Wilshire 5000 total stock index market cap weighted. Market capitalization is the stock market value of a company. A weighted index gives more value in the index to larger companies than to smaller companies. In total market indexes, the market caps range from approximately $400 billion down to less than $1 million. This means the largest company has more than 400,000 times the weighting factor as the smallest company in one of these indexes.
Numbers of Stocks
Different stock tracking companies define the cutoff between large-cap and small-cap companies at different market capitalizations. The Wilshire Associates website states the Wilshire 5000 index includes 750 large-cap stocks, the next 1,750 stocks are small cap, and the balance consist of micro-cap stocks. The Wilshire Associates do not use a mid-cap classification. Using these numbers, the large-cap stocks make up 15 percent of the companies in the index. Small-cap companies comprise 35 percent of the stocks.
Although there are more small-cap stocks in the total market index, the large-cap companies make of the majority of an index value. Wilshire states the 750 large cap stocks comprise 89 percent of the Wilshire 5000 index value. The next 1,750 small-cap stocks are worth about 10.5 percent. The remaining 2,500 micro-cap stocks are worth less than 1 percent of the stock market value tracked by the index.
About the Author
Jonathan Langsdorf has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Langsdorf has a bachelor's degree in mathematics from the U.S. Air Force Academy.
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