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MARKET SAVVY | Savvy Confidential: A Briefing for Investors

Total Stock Market Funds Attract Cash

July 22, 1999|Bloomberg News

U.S. mutual fund investors are taking a broader view of the market when it comes to buying index funds.

Vanguard Group, the leading U.S. manager of index mutual funds, said Wednesday that a rising percentage of new investments is going to funds that track the Wilshire 5,000 index rather than the Standard & Poor's 500.

The Wilshire is the broadest U.S. index, covering about 7,400 stocks, while the S&P represents 500 of America's biggest companies.

The momentum started to shift early this year, said Brian Mattes, Vanguard's chief spokesman. Vanguard Total Stock Market fund is "taking in a much greater proportion of index money than last year," he said.

The Wilshire 5,000 has risen 11.6% so far this year, compared with a 12.2% rise in the S&P 500 and a 19.8% rise in the Dow Jones industrial average.

But the assets of the Vanguard Total Stock Market fund increased almost 40% to $13 billion in the first half, the company said. By comparison, the assets of the Vanguard 500 Index fund climbed 25% to $92.7 billion.

"Total stock market funds are the ultimate no-brainer," said Sheldon Jacobs, editor of No-Load Fund Investor, an industry newsletter published in Irvington-on-Hudson, N.Y. "The only way you can lose is if the market goes down and never comes back."

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