Griffin
10-17-2006, 12:19 PM
Understanding the difference between the DWCP and the DWCPF:
These are both funds that mirror Wilshire 4500 index (which is what the S-fund is). In a nutshell, the Wilshire 4500 is an extract of the Wilshire 5000 companies: which represent the entire US market excluding the companies of the S&P 500.
Both of these funds (DWCP and DWCPF) include all the same companies – but the total composition of each fund is different by how much a company is represented in the fund.
Example: Reduce the entire stock market to 5 companies, A, B, C, D and E.
A is a large cap with 500 share in existence
B is a mid cap with 300 shares in existence of which 180 (60%) are available for trading
C is a mid cap with 300 shares in existence of which 120 (40%) are available for trading
D is a small cap with 200 shares in existence of which 120 (60%) are available for trading
E is a small cap with 200 shares in existence of which 80 (40%) are available for trading
The Wilshire 5000 would be a composite of all five companies
Company A represents the S&P 500
The Wilshire 4500 would therefore only represent companies B, C, D and E.
In determining the weight of each stock in the fund, the DWCP only looks at the TOTAL amount of shares, where the DWCPF looks at the AVAILABLE shares.
In this example the DWCP is weighted based on a 1000 shares (300+300+200+200)
So the DWCP would hold
30% company B
30% company C
20% company D
20% company E
Where the DWCPF (which is what the S-fund more closely matches) is weighted based on 500 shares (180+120+120+80)
So the DWCPF would hold
36% company B
24% company C
24% company D
16% company E
Companies that have more available shares do not behave significantly different then companies with less available shares in the market on any given day. So in the grand scheme of things, once you factor all this across every sector and 4500 different companies, the behavior of the two funds are virtually identical despite the price difference due to their slightly different weightings.
These are both funds that mirror Wilshire 4500 index (which is what the S-fund is). In a nutshell, the Wilshire 4500 is an extract of the Wilshire 5000 companies: which represent the entire US market excluding the companies of the S&P 500.
Both of these funds (DWCP and DWCPF) include all the same companies – but the total composition of each fund is different by how much a company is represented in the fund.
Example: Reduce the entire stock market to 5 companies, A, B, C, D and E.
A is a large cap with 500 share in existence
B is a mid cap with 300 shares in existence of which 180 (60%) are available for trading
C is a mid cap with 300 shares in existence of which 120 (40%) are available for trading
D is a small cap with 200 shares in existence of which 120 (60%) are available for trading
E is a small cap with 200 shares in existence of which 80 (40%) are available for trading
The Wilshire 5000 would be a composite of all five companies
Company A represents the S&P 500
The Wilshire 4500 would therefore only represent companies B, C, D and E.
In determining the weight of each stock in the fund, the DWCP only looks at the TOTAL amount of shares, where the DWCPF looks at the AVAILABLE shares.
In this example the DWCP is weighted based on a 1000 shares (300+300+200+200)
So the DWCP would hold
30% company B
30% company C
20% company D
20% company E
Where the DWCPF (which is what the S-fund more closely matches) is weighted based on 500 shares (180+120+120+80)
So the DWCPF would hold
36% company B
24% company C
24% company D
16% company E
Companies that have more available shares do not behave significantly different then companies with less available shares in the market on any given day. So in the grand scheme of things, once you factor all this across every sector and 4500 different companies, the behavior of the two funds are virtually identical despite the price difference due to their slightly different weightings.