Frequently Asked Questions

How many stocks are in a total market index?

The number varies by index provider and fluctuates over time as companies go public, merge, or are delisted.

• CRSP US Total Market Index: approximately 4,000 securities
• Russell 3000: exactly 3,000 (fixed count, by design)
• Wilshire 5000: approximately 3,500 (the original ~5,000 count has declined due to corporate consolidation)
• S&P Total Market Index: approximately 4,000
• MSCI USA IMI: approximately 2,400

Despite these differences in count, all of these indices cover essentially the same US equity market — the variation is primarily at the small-cap and micro-cap margins, which represent a small fraction of total market value.

Does a total market index include bonds?

No. Total market indices track equity (stocks) only. The term "total market" refers to the scope of stock coverage — all publicly traded equities in a defined market — not coverage of all asset classes.

Bonds are covered by separate instruments: the Bloomberg US Aggregate Bond Index, the Bloomberg US Total Bond Market Index, or similar benchmarks. When financial advisors refer to a "total market portfolio," they typically mean a combination of a total equity market fund and a total bond market fund.

Vanguard Total Bond Market ETF (BND) and Fidelity Total Bond Fund (FTBFX) are common bond complements to total stock market holdings.

What is the difference between a total market index and a total market fund?

The index is a benchmark — a list of securities and their weights, maintained by an independent index provider (CRSP, FTSE Russell, Wilshire, etc.). The index itself is not something you can invest in directly.

The fund is an investment product — a portfolio of securities that attempts to replicate the index by holding the same stocks in the same weights. You invest in the fund; the fund tracks the index.

One index can be tracked by multiple funds. The CRSP US Total Market Index is tracked by VTI (Vanguard ETF), VTSAX (Vanguard mutual fund), FSKAX (Fidelity mutual fund), SWTSX (Schwab mutual fund), and others. They hold the same underlying securities; the difference is structure, provider, and cost.

Is the Dow Jones Industrial Average a total market index?

No. The Dow Jones Industrial Average is among the least representative measures of the overall US equity market available.

The DJIA tracks exactly 30 large, well-established US companies — a tiny fraction of the publicly traded universe. It is price-weighted rather than market-cap weighted: a company with a $500 stock price has more influence on the index than a company with a $100 stock price, regardless of the relative size of the two companies. A $1 move in a high-priced stock affects the DJIA the same as a $1 move in a low-priced stock.

The Dow is primarily a historical artifact. It was useful when calculating market-cap weights was computationally impractical. Today, market-cap weighted indices like the S&P 500 and total market indices are far more representative measures of market performance.

What percentage of the total market is the S&P 500?

By market capitalisation: the S&P 500 represents approximately 80% of total US equity market cap. The largest US companies dominate the market, and the S&P 500 captures nearly all of them.

By number of companies: the S&P 500 holds approximately 500 companies out of roughly 4,000 in a total market index — about 12% by count.

This apparent paradox — 12% of companies representing 80% of value — reflects how concentrated equity market value is in the largest companies. The top 10 US companies by market cap are each worth more than the bottom 2,000 combined.

How often does a total market index rebalance?

Reconstitution schedules vary by index:

• CRSP US Total Market: quarterly (March, June, September, December)
• Russell 3000: annually — reconstitution completes on the last Friday of June. A significant market event each year, generating high trading volumes in small-cap stocks.
• Wilshire 5000: monthly — new eligible securities are added each month
• S&P Total Market: quarterly
• MSCI USA IMI: quarterly, with major reconstitution in May and November

Between scheduled reconstitutions, the index weights shift continuously as stock prices change. A company that rises in value gets a larger weight automatically; one that falls gets a smaller weight. No trading is required for this continuous reweighting — it happens naturally as prices move.

Are international stocks included in the US total market index?

No. US total market indices (CRSP US Total Market, Russell 3000, Wilshire 5000, S&P Total Market, MSCI USA IMI) cover only US-listed companies incorporated in the United States.

International stocks are covered by separate indices:

• MSCI ACWI IMI — all countries, developed and emerging, all cap sizes
• FTSE Global All Cap — developed and emerging, all cap sizes
• MSCI EAFE — Europe, Australasia, Far East (developed markets excluding US and Canada)
• MSCI Emerging Markets — emerging markets only

Investors who want both US and international exposure in a single fund can use VT (Vanguard Total World Stock ETF) or VTWAX, which track the FTSE Global All Cap Index.

What happens to my total market fund when a company goes bankrupt?

When a company in a total market index files for bankruptcy, its stock typically declines sharply — often to near zero — as the equity becomes worthless in most bankruptcy proceedings (debt holders are paid before equity holders).

The impact on a total market index fund depends on the bankrupt company's weight in the index. For most bankruptcies, the company is a very small fraction of the total index — often less than 0.01% — so the impact on the overall fund is minimal.

The index removes the company at or after its delisting from the relevant exchange. The fund sells the (now near-worthless) shares and uses the proceeds to maintain proportional holdings in the remaining index constituents. The process is automatic.

For very large company bankruptcies — a major bank or retailer — the impact can be more significant. But because a total market fund holds thousands of stocks, even a large single-company bankruptcy rarely moves the overall portfolio by more than a fraction of a percent.

Is a total market index fund the same as an index fund?

Not exactly. All total market index funds are index funds — but not all index funds are total market funds.

An "index fund" is any fund that passively tracks an index: the S&P 500, a bond index, a sector index, a dividend index, a factor index, an international index, and so on. The term "index fund" describes a structure and investment approach, not a specific market coverage.

A "total market index fund" specifically tracks a total market index — one designed to capture all publicly traded stocks in a given market. It is a subset of the broader index fund category.

When John Bogle and other advocates of passive investing recommend "index funds," they typically mean low-cost, broad-market index funds — either total market or S&P 500 — not niche index funds that cover specific sectors or factors.

Who owns the most shares of total market index funds?

The largest holders of total market index fund shares are institutional investors:

• 401(k) plan administrators — employer-sponsored retirement plans routinely offer total market index funds as core options. Tens of millions of American workers have automatic contributions flowing into these funds.
• Pension funds — state and corporate pension funds use total market index funds as passive equity allocations.
• Endowments and foundations — university endowments and charitable foundations hold index funds as part of diversified portfolios.
• Retail investors — individuals directly holding VTSAX, VTI, FSKAX, and similar funds through brokerage accounts and IRAs.

By assets, Vanguard's VTSAX is the most widely held US mutual fund, with tens of millions of individual investor accounts. The three largest asset managers — Vanguard, BlackRock (iShares), and State Street — collectively hold extraordinary concentrations of index fund assets, which has prompted academic and regulatory discussion about the implications of concentrated passive ownership for corporate governance.