With the rise of passive investing, the need for a broad-based, comprehensive index that covers the entire US stock market has never been greater. The Dow Jones US Completion Total Stock Market Index does just that by measuring the performance of all publicly listed companies in the United States, including small-caps and mid-caps.
The index is market-capitalization-weighted, meaning that the larger companies have a greater impact on the overall performance of the index. Whether you’re looking to get exposure to the entire US stock market or looking for an index to use as a benchmark for your portfolio, it’s a great choice and let’s discuss it further in detail in this FintechZoom article. You can also read a different article about what are indexes to see the global overview on stock indexes.
What Is Dow Jones US Completion Total Stock Market Index?
It is a sub-index of the Dow Jones U.S. Total Stock Market Index and measures the performance of all constituents in the Dow Jones U.S. Total Stock Market Index that are not also constituents of the S&P 500. In other words, it is designed to provide a complete picture of the stock market by including smaller companies not part of the S&P 500.
Quick Facts And Key Stats
With over 3,500 constituents, the Dow Jones US Completion Total Stock Market Index covers approximately 95% of the investable US equity market. The Dow Jones Completion Index is float-adjusted market cap weighted and rebalances quarterly in March, June, September, and December.
It was launched on Jan 30, 1987, with a first value date of Jan 30, 1987, and is calculated in real-time. The index is denominated in USD, and its regulatory authorization is from the European Union.
The construction methodology and calculation frequency for the Dow Jones US Completion Total Stock Market Index are designed for investment planning, portfolio hedging, and index futures and options strategies.
The Characteristics Of The Index
With 3,748 constituents, the Dow Jones US Completion Total Stock Market Index covers many companies. The largest company in the index has a market capitalization of 63,950.48, while the smallest company has a market capitalization of 1.23. The mean market capitalization is 1,858.67, and the median is slightly lower at 1,852.72.
A company’s market capitalization is determined by multiplying the current share price by the number of outstanding shares. Therefore, a company’s total market capitalization is the value investors would pay for the entire company.
Investors use market capitalization to identify companies of different sizes. A company with a large market capitalization is often seen as more established and less risky than a smaller one for major stock indexes.
The constituents of the Dow Jones US Completion Total Stock Market Index are, therefore, a mix of large, established companies and small, newer companies. This allows investors to diversify their portfolios and access a wide range of different companies.
An index is, therefore, an important tool for investors who want to get exposure to the US stock market. It is a broad index that covers a wide range of companies and provides good diversification.
What’s The Sector Breakdown?
With an index weight of 23.2%, financials are the top sector represented in the Dow Jones US Completion Total Stock Market Index. The industrials, technology, and healthcare sectors come in second, third, and fourth place with weights of 18.0%, 16.1%, and 12.6%, respectively. Rounding out the index are consumer services (11.4%), consumer goods (7.3%), oil & gas (5.5%), basic materials (3.6%), utilities (2.0%), and telecommunications (0.3%).
Use As A Research Tool
The index looks at how stocks have traded in the past and can be used as a research tool to understand better patterns and changes in investing behavior. It can also provide helpful comparisons, though it is important to remember that an index is not a complete picture. Indexes are based on actual trades so that they can be unaffected by investor emotion. This can make them more useful for seeing historical trends than predicting future market movements, using for instance a stock screener. When used correctly, stock indexes can be valuable for spotting long-term patterns.
Also, you can use the Dow Jones US Completion Total Stock Market Index for comparison purposes. For example, if you want to compare how two stocks have performed over a certain period, you can look at their price changes concerning the index. If one stock outperforms the other, it means that it is doing better than the average stock in the market.
Conclusion
With a weighting of 95%, the Dow Jones US Completion Total Stock Market Index is one of the most important indexes for those looking to invest in American stocks. It includes 3,741 stocks from all major exchanges and sectors, making it a well-rounded benchmark for the U.S. stock market. While it does not hold any foreign securities or investment companies, the index still provides a good overview of how the American stock market is performing.
