Overview:
The Wilshire 5000 is considered the "total market index." Designed to track the value of the entire stock market, the index was started in 1974 by Wilshire Associates soon after computers made the daily computation of such a large index possible. Though it is the nation's broadest-based index, and probably the most accurate reflection of the overall market, it is not frequently cited in the financial press as a gauge for the market�s return. The reason for this is that it is often considered "too broad" a definition of the market. Most practitioners prefer to use the S&P 500 as a proxy for the overall market, especially since it encompasses 70% of its market value. The remaining 30% of the market, which consists primarily of small-cap stocks, is generally considered to be represented by the Russell 2000 Index.

Composition:
The Wilshire 5000 is comprised of virtually every stock that meets three criteria:

1)  The firm�s headquarters are based in the U.S.
2)  The stock is actively traded on a U.S. exchange.
3)  The stock has widely available pricing information (this disqualifies bulletin board, or over-the-counter, stocks).

Though the index started with--as the name implies--5,000 firms, it actually contains around 6,700 today. The index is market cap weighted, meaning that the firms with the highest market value account for a larger portion of the index. In the chart below you can see that the top 10 firms make up a very disproportionate 17% of the index's total value.

Positives:
The Wilshire 5000 is a very easy way to determine the path of the U.S. stock market. Since it includes essentially every public firm, it is highly representative of the overall market.

Drawbacks:
Because it is so diverse, it is impossible to tell which sectors or asset classes are moving the market (technology, industrial, small-cap, large-cap, etc) by merely looking at the Wilshire 5000. In addition, many people do not own a large number of the small-cap stocks that this index holds, so it may not accurately represent the portfolio mix held by most investors.

How can I trade/invest in this index?
Vanguard offers an exchange-traded fund, called the Vanguard Total Stock Market VIPERs (symbol VTI), which tracks the performance of the Wilshire 5000. This ETF makes an excellent choice for investors thanks to its ease of trading as well as its extremely low 0.15% expense ratio. Vanguard, as well as other firms, also offers mutual funds that capture the returns of the broad market, such as the Vanguard Total Stock Market Index Fund (VTSMX).

Additional Information:
Wilshire 5000 
Vanguard VIPER (VTI)