Invest in the Wilshire 5000

It tracks the entire US market but is dominated by its large-cap stocks.

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The Wilshire 5000 tracks every actively traded US equity, offering an appealing buy-the-market opportunity for investors in Australia seeking portfolio diversification. But not many funds track this index, so there are few opportunities for Australians interested in investing in the Wilshire 5000.

What is the Wilshire 5000?

The Wilshire 5000, also called the Wilshire 5000 Total Market Index (TMWX), is an index that tracks all US equities actively traded on the American Stock Exchange. This broad-based market index was named for its nearly 5,000 stocks when first launched in 1974 — but the index hasn’t held more than 5,000 companies since 2005. As of 2019, the index held 3,492 stocks.

To be included in the Wilshire 5000, a stock must meet three criteria:

  • The company must be headquartered in the US.
  • Its stocks must be actively traded on an American stock exchange.
  • Stocks must have publicly available pricing information.

How to invest in the Wilshire 5000

Unlike other indexes that only capture a slice of the market, the Wilshire 5000 aims to track the entire US stock market. It covers a generous selection of stock market sectors and offers market exposure through stocks and exchange-traded funds (ETFs). Investors can purchase ETFs that track the full index or invest in individual stocks within the index.

Here’s a snapshot of the process:

  1. Pick a platform. Compare trading platforms in Australia to find the brokerage that best meets your investment needs.
  2. Open an account. Applications for web-based brokerages can be completed online, and you’ll need to fund your account before you start trading.
  3. Purchase securities. Use your platform’s research tools to find the stocks or funds you’d like to purchase.
  4. Monitor investments. Log in to your brokerage account to track your investment performance.

What stocks are in the Wilshire 5000?

It tracks some of the biggest publicly traded companies in the US, including:

  • Amazon (AMZN)
  • Apple (AAPL)
  • Berkshire Hathaway Inc. (BRK.A)
  • Facebook (FB)
  • Johnson & Johnson (JNJ)
  • Microsoft (MSFT)
  • Tesla (TSLA)
  • Visa Inc. (V)

What ETFs track the Wilshire 5000?

Major funds that track the Wilshire 5000 include:

  • Wilshire 5000 Total Market ETF (TMWX)
  • Wilshire 4500 Completion ETF (XWXSX)
  • Wilshire 5000 Index Investment Fund (WFIVX)

How is the Wilshire 5000 performing?

The graph below tracks how the Wilshire 5000 has performed historically. Toggle between the options on the graph to see the data for the past month, three months, year or five years.

Why should I invest in the Wilshire 5000?

The Wilshire 5000 acts as a barometer for US markets. Investing in a comprehensive index fund provides instant portfolio diversification for an investor in Australia with limited market exposure.

Broad indexes like the Wilshire offer investors the opportunity to “buy the market” — you’re getting a small slice of every tradable security on the American Stock Exchange. This type of diversification can help your portfolio weather the natural highs and lows that impact individual industries.

What are the risks of investing in Wilshire 5000?

The Wilshire 5000 suffers from the same flaw as the Russell 3000: it overweights large-cap stocks. As a result, the index is largely dominated by the biggest companies it tracks.

To build a balanced portfolio, consider investing in indexes that specifically target small-cap stocks, like the Russell 2000.

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Limited offer: Get 5 free ASX trades when you open a new account with ThinkMarkets before June 30, 2021 (T&Cs apply).
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Saxo Capital Markets (Classic account)
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Important: Share trading can be financially risky and the value of your investment can go down as well as up. “Standard brokerage” fee is the cost to trade $1,000 or less of ASX-listed shares and ETFs without any qualifications or special eligibility. If ASX shares aren’t available, the fee shown is for US shares. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.

Bottom line

The Wilshire 5000 is among the broadest and most comprehensive indexes to track the US market. Invest by purchasing individual stocks or funds that track the index. But remember that the Wilshire 5000 is heavily impacted by large-cap stocks, so if you’re interested in investing in smaller businesses, consider building out your portfolio with funds that track targeted subsections of the market.

The quickest way to meet your investment goals is by using the right platform. Explore your brokerage account options with multiple trading platforms for the account best suited to your investment needs.

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