The Mystery of the Wilshire 5000 Index
(Bloomberg Opinion) -- Here’s a puzzle: Why does Wilshire Analytics’ flagship Wilshire 5000 Total Market Index have only 3,818 stocks in it? The reason for that disparity was part of our conversation with Jason Schwarz, president of Wilshire Funds Management and Wilshire Analytics, and this week’s guest on Masters in Business.
The index was started with 5,000 stocks. It rose to include 7,562 companies on July 31, 1998, as the dot-com boom took off, and fell to a low of 3,776 on Dec. 31, 2013, during the sluggish recovery from the financial crisis. It now has 3,818 stocks. Much of the disparity is because the index often includes small companies, which tend to run into trouble in economic downturns and drop out of the index or go out of business.
Schwarz describes the challenges of working for such a complex firm that does so many different things, from consulting services to analytical products, as well as managing various investment vehicles. The firm now has more than $195 billion in assets under management for more than 600 institutional investors.
Wilshire, which opened in 1972, was a pioneer in the field of quantitative investment analysis. Its founder and chairman, Dennis A. Tito, started his career as a rocket scientist, working for the Jet Propulsion Laboratory in the 1960s. He later became the world’s first paying space traveler in 2001, when he flew with a Russian crew aboard a Soyuz spacecraft to the International Space Station.
The transcript of our conversation is posted here.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Barry Ritholtz is a Bloomberg Opinion columnist. He founded Ritholtz Wealth Management and was chief executive and director of equity research at FusionIQ, a quantitative research firm. He is the author of “Bailout Nation.”
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