All or Nothing

December 02, 2005

America's most complete index gets industry-level breakdowns; Dow Jones Wilshire aims to compete at all levels of indexing.

Dow Jones Wilshire rolled out new U.S. industry-level indexes based on the Dow Jones Wilshire 5000, giving the DJ Wilshire indexes a full suite of U.S. sector indexes for the first time in its history.  The indexes are based on the Industry Classification Benchmark, or ICB, a (relatively) new benchmark system developed jointly by Dow Jones and FTSE.

The launch marks an effort by Dow Jones/Wilshire to stay current in the indexing industry, where the new mantra seems to be: Offer it all, or offer nothing at all.

"The launch of these new industry indexes - combined with the recently introduced Dow Jones Wislhire U.S. Style Indexes - reflects our commitment to providing the broadest measure possible of U.S. stocks," said Michael A. Petronella, president of Dow Jones Indexes/Ventures.

"We have complete the U.S. tool-set of indexes to explain equity performacne," added Dennis A. Tito, chairman and CEO of Wilshire Associates.

The launch of style- and sector-level indexes have come fast and furious across the industry in the past year, with Standard and Poor's, PowerShares/Intellidexes, MSCI and others all either rolling out or significantly overhauling their indexing standards.

The indexers appear to be capitalizing on two trends: 1) The growing use of asset allocation models, which use style and sector indexes to add targeted exposure to U.S. equity markets; and 2) A desire by end users to standardize their indexes across one index family. In the past, users were satisfied to pick and choose their indexes from different families - choosing a broad market index from one provider, a sector index from another, and an international index from a third.  But with the growing internationalization of investing, more people want to standardize within one family, to ease analysis and limit accidental "double-exposure."

"Institutional investors can use the now fully extended Dow Jones Wilshire U.S. index family to benchmark their portfolios against either a piece of the market or the entire asset class," said Petronella.

Dow Jones Wilshire is now offering ten core Industry indexes, along with 18 Supersector, 39 Sector and 104 Subsector indexes as covered by the ICB.  The ICB was launched in March 2004 when Dow Jones and FTSE joined their industry classification systems. It's trying to challenge the dominant Global Industry Classification System, or GICS, from Standard and Poor's.

 

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