Stock Market Indexes beyond the Most Recognizable Names
In addition to the Dow Jones Industrial Average, Nasdaq, and Standard & Poor’s 500, there are other indexes you can use to track the market. They include the Russell indexes, the Wilshire 5000, Morgan Stanley Capital International, and international indexes such as the Nikkei.
Russell 1000, 2000, and 3000
The Russell 3000 index includes the 3,000 largest publicly traded companies (nearly 98 percent of publicly traded stocks). The Russell 3000 is important because it includes many mid cap and small cap stocks. Most companies covered in the Russell 3000 have an average market value of a billion dollars or less.
The Russell 3000 index was created by the Frank Russell Company, which computes a series of indexes including the Russell 1000 and the Russell 2000. The Russell 2000 contains the smallest 2,000 companies from the Russell 3000, while the Russell 1000 contains the largest 1,000 companies. The Russell indexes do not cover microcap stocks (companies with a market capitalization under $250 million).
Dow Jones Wilshire 5000
The Wilshire 5000, which is often referred to as the Wilshire Total Market Index, is probably the largest stock index in the world. Created in 1974 by Wilshire Associates, it started out tracking 5,000 stocks and has ballooned to cover more than 7,500 stocks.
The advantage of the Wilshire 5000 is that it’s very comprehensive, covering nearly the entire market. (At the very least, the stocks tracked are the largest publicly traded stocks.) It includes all the stocks that are on the major stock exchanges (NYSE, AMEX, and the largest issues on Nasdaq), which by default also include all the stocks covered by the S&P 500. The Wilshire 5000 is a market value–weighted index.
Morgan Stanley Capital International
With indexes of all kinds — stocks, bonds, hedge funds, U.S. and international securities — Morgan Stanley Capital International (MSCI), although not quite a household name, has been gaining ground as the indexer of choice for many exchange-traded fund (ETF) providers. MSCI indexes are the backbone of domestic and international Vanguard ETFs, as well as Barclays iShares individual country ETFs.
This is considered Japan’s version of the Dow. If you’re invested in Japanese stocks or in stocks that do business with Japan, you can bet that you want to know what’s up with the Nikkei.