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What indexes do index funds usually mirror?

April 26, 2017funds index indexes mirror usually

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What indexes do index funds usually mirror?

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Index funds usually do not mirror the Dow Jones Industrial Average. Because this index is made up of only 30 large companies, it is generally considered to be too narrow of an indicator for the whole U.S. stock market. The most popular index for index funds is the S&P 500. The overwhelming majority of money invested in index mutual funds is invested in index funds that attempt to mirror the S&P 500 index. The S&P 500 is a good proxy of the whole U.S. stock market because it constitutes over 80% of the value of the whole U.S. market. The Wilshire 5,000 is also used by some index funds. It can be argued the Wilshire 5,000 should be the index used by index mutual funds because it represents almost 100% of the market value of the whole U.S. market.