Dow Jones US Total Market Index – Definition

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Dow Jones U.S. Total Market Index Definition

Dow Jones U.S. Total Market Index is a Market-capitalization weighted index providing readily available prices and price changes in the shares of the US-based corporations listed on the New York Stock Exchange, American Stock Exchange, and NASDAQ Stock market. It is a total market index covering the top 95% of the US stocks. It includes all the US stocks except very small companies and the least-liquid US stocks.

A Little More on What is the Dow Jones US Total Market Indices

The index is maintained by Dow Jones indexes which are named after its founder Charles Dow and his partner Edward Jones. It is a very broad index covering all types of industries in the U.S. The Dow Jones U.S Total Market Index is comprised of the Dow Jones large-cap, mid-cap, small-cap, value and growth indexes. The total index is divided into several sub-indexes each for tracking the trend of different segments of the market according to size, sector or type of business.
The aim of developing the index is to provide transparent and correct information on the US equity stock market with readily available price list.

There are about 3,650 stocks included in this index including large-cap, mid-cap, small-cap and micro-cap companies. Foreign securities, exchange-traded products or other investments companies are not listed on this index. It is considered to be highly reliable index reflecting U.S share market and followed worldwide. The other such indexes are Wilshire 5000 Total Market Index and the CRSP US Total Market Index. All of these are Market-capitalization weighted and float-adjusted.
The indexes are very useful in understanding the trend of the US stock market and provide a general picture of the market.

References for the Dow Jones US Total Market Index

Academic Research on Dow Jones U.S. Total Market Index

  • ●      What does the performance of the Dow Jones Sustainability Group Index tell us?, Cerin, P., & Dobers, P. (2001). This research investigates the structure and transparency of the DJSGI compared with the DJGI. The results show that the DJSGI is more focused on technology, and this gives it a higher growth of market capitalization than the DJGI. The objective is to determine the factors responsible for this.
  • ●      International evidence on ethical mutual fund performance and investment style, Bauer, R., Koedijk, K., & Otten, R. (2005). Journal of Banking & Finance29(7), 1751-1767. This article aims to show that risk adjustment does not affect breed difference in returns for both ethical and conventional funds. Emphasis is placed on 103 German UK and US firms’ database collected from the period of 1990-2001, as case study.
  • ●      Sustainable development and corporate performance: A study based on the Dow Jones sustainability index, López, M. V., Garcia, A., & Rodriguez, L. (2007). Journal of Business Ethics75(3), 285-300. This research explores the differences in performance between DJSI and DJGI firms with respects to the adoption of practices under the Corporate Social Responsibility.
  • ●      Risk and return of Islamic stock market indexes, Hakim, S., & Rashidian, M. (2002, October). Risk and return of Islamic stock market indexes. In 9th Economic Research Forum Annual Conference in Sharjah, UAE (pp. 26-28). This article examines the competition between the DJIMI and the Wilshire 5000 index in tracking the performance of firms in the Islamic Market. We aim to get more details about the workings of the DJIMI on the Islamic Market by use of the cointegration technique. We also wish to show the competition between these two indexes.
  • ●      Á GARCH Examination of Macroeconomic Effects on US Stock Market: A Distinction Between the Total Market Index and the Sustainability Index, Sariannidis, N., Giannarakis, G., Litinas, N., & Konteos, G. (2010). European Research Studies13(1), 129. This research examines how certain variables of macroeconomics affects stocks returns in the US market using the A GARCH model.
  • ●      Global standards and ethical stock indexes: The case of the Dow Jones Sustainability Stoxx Index, Consolandi, C., Jaiswal-Dale, A., Poggiani, E., & Vercelli, A. (2009).  Journal of Business Ethics87(1), 185-197. This research investigates the impact of CSR on asset allocation activities in a firm. It investigates the actions which investors have to make in order to maintain a high ethical profile or portfolio and also made standard returns from trades.
  • ●      Islamic norms for stock screening: A comparison between the Kuala Lumpur stock exchange Islamic index and the dow jones Islamic market index, Abdul Rahman, A., Azlan Yahya, M., & Herry Mohd Nasir, M. (2010). International Journal of Islamic and Middle Eastern Finance and Management3(3), 228-240. The purpose of this paper is to compare the criteria used among Islamic Indices, specifically between the Kuala Lumpur Stock Exchange Shari’ah Index (KLSESI) and the Dow Jones Islamic Market Index (DJIM) in screening a permissible company for investment purposes. The two controversial criteria examined are: level of debt and level of liquidity of company.
  • ●      US stock market crashes and their aftermath: implications for monetary policy, Mishkin, F. S., & White, E. N. (2002).  (No. w8992). National bureau of economic research. The objective of this research is to show that financial instability is the key problem facing monetary policy makers as opposed to the traditional believe of stock market crashes. This paper further explains this view by using 15 historical crashes over the last century as case studies.
  • ●      Faith-based ethical investing: the case of Dow Jones Islamic indexes, Hassan, K. M., & Girard, E. (2010). This research examines the performance of seven indexes chosen from the DJIM against their non-islamic counterparts by means of different measures. The objective of this research is to prove the similarities between the two indexes.
  • ●      Are Dow Jones Islamic equity indices exposed to interest rate risk?, Shamsuddin, A. (2014). Economic Modelling39, 273-281. This paper explores the Dow Jones Islamic Market indices and their related stocks. It examines the prohibitions placed by the Islamic markets on various interests and certain investments. The main objective is to analyse the interest rate risk caused by restrictions on different stocks in this market. Results however show that interest rate risk in the Islamic Market is lesser than that of the World Sector, and it is affected by various factors.

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