How To Invest in The Leading Stock Indexes In 2021

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Stock market chart

The true size of the global stock market can be hard to quantify, although the total market cap of all publicly traded companies in 2020 was approximately $93 trillion.

 

Interestingly, the global stock market is home to both indices and individual stocks, the former which enable you to invest in an entire basket of equities and achieve instant diversification (minimising your exposure and immediate risk in the process.

 

But what’s the combined size of the stock index marketplace, and what are the leading three indices for investors to consider?

 

How Big is the Stock Index Marketplace?

 

Not only do stock market indexes enable investors to target a diverse selection of equities in different industries and countries, but they also serve as powerful and insightful indicators for global and country-specific economies.

 

In the US alone, there are approximately 5,000 individual indexes, including three of the most widely followed in the form of the S&P 500, Dow Jones Industrial Average and the Nasdaq Composite.

 

In total, the total market capitalisation value of these US stock indexes is thought to be in the region of $48 trillion, at least during the first quarter of 2021.

 

One of the best gauges of the cumulative market is the Wilshire 5000 Index, which includes all stocks from the US market and is widely followed through the MT4 platform in the Forex market.

 

What Are The Top 3 Indexes For 2021

 

The question that remains is what are the top three indexes for 2021? Here’s our breakdown and a quick glance at their scope and market cap value.

 

#1. The S&P 500

 

We’ll start with the S&P 500, which boasts a total of 505 constituents and covers a broad range of sectors in the US.

 

Interestingly, the criteria for being listed in the S&P 500 is being based in the US and a large-cap equity, while some of the biggest and most renowned North American corporations are accessible through this vehicle.

 

Founded in March 1957, the S&P 500 boasts a total market cap value of $40.3 trillion, making it one of the largest entities of its type in the global marketplace.

 

#2. The Dow Jones Industrial Average

 

This index is a much smaller and more selective entity, and one that offers a price-weighted measurement stock market index of 30 prominent companies listed on stock exchanges nationwide.

 

To this end, the cumulative market cap value of the Dow Jones Industrial Average is just $10.84 trillion, while its 30 constituents are all large-cap entities with significant turnovers and bottom lines.

 

#3. The Wilshire 5000

 

We close with the Wilshire 5000 Total Market Index, which is a market-capitalisation-weighted index of all American-stocks actively traded in the US.

 

As of December 31st, 2019, the index comprised 3,473 constituents, with these entities boasting a combined value in the region of $48.58 trillion.

 

Considered to be one the very best gauges of stock market and wider economic performance in the US, this is a widely followed index that offers tremendous insight for share traders nationwide.

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