The CRSP US Total Market Index is a comprehensive stock market index that represents the entire US equity market.
It is designed to track the performance of nearly all publicly traded US companies, providing a broad and accurate representation of the US stock market.
Key Features
- Comprehensive Coverage: The CRSP US Total Market Index includes over 4,000 constituents, covering more than 99% of the US equity market.
- Market-Capitalization-Weighted: The index is weighted by market capitalization, ensuring that the largest companies have a greater influence on the index’s performance.
- Float-Adjusted: The index is float-adjusted, meaning that it only includes shares that are available for public trading, excluding shares held by insiders, institutions, and other restricted holders.
- Reconstituted Quarterly: The index is reconstituted quarterly to ensure that it remains representative of the US equity market.
History
- Introduced in 2012: The CRSP US Total Market Index was introduced by the Center for Research in Security Prices (CRSP) in 2012.
- Backdated to 1925: The index has been backdated to 1925, providing a long-term historical record of the US equity market.
Uses
- Benchmarking: The CRSP US Total Market Index is widely used as a benchmark for investment performance, allowing investors to compare the performance of their portfolios to the broader US equity market.
- Research: The index is used by researchers and academics to study the US equity market, including its performance, volatility, and other characteristics.
- Investment Products: The CRSP US Total Market Index is the basis for a range of investment products, including index funds, exchange-traded funds (ETFs), and other financial instruments.
What Actually Tracks This Index
The most famous product tracking this index is Vanguard’s Total Stock Market Index Fund, in both its mutual fund form (VTSAX) and its ETF form (VTI). When you buy VTI, you are buying a slice of roughly 3,500 of the index’s nearly 4,000 U.S. stocks, weighted by size, which is why it shows up so often in the FIRE community and in lazy portfolios. One confusion worth clearing up: VTI does not track the S&P 500. The S&P 500 covers the 500 largest companies; VTI covers the entire market, including the thousands of small and mid-sized companies the S&P 500 leaves out. Over long stretches the two behave similarly, because the biggest companies dominate both, but they are not the same index and the smaller-company exposure in VTI is the whole point. For background on the index provider itself, see the site’s glossary post on the Center for Research in Security Prices.
Comparison to Other Indices
- S&P 500: The CRSP US Total Market Index is often compared to the S&P 500, which is a more narrow index that only includes the 500 largest publicly traded US companies.
- Russell 3000: The CRSP US Total Market Index is also compared to the Russell 3000, which is a market-capitalization-weighted index that includes the 3,000 largest publicly traded US companies.
Benefits
- Comprehensive Representation: The CRSP US Total Market Index provides a comprehensive representation of the US equity market, making it a useful benchmark for investment performance.
- Low Turnover: The index has a low turnover rate, which means that it is less likely to experience significant changes in its constituents, reducing trading costs and other expenses.
- Transparent Methodology: The index’s methodology is transparent and well-documented, making it easier for investors to understand its construction and maintenance.
By tracking the performance of the CRSP US Total Market Index, investors can gain insights into the overall direction of the US equity market and make more informed investment decisions.
The Index Is Not the Fund
The CRSP US Total Market Index is the recipe; VTI is the meal. The index covers nearly 4,000 U.S. stocks, but VTI holds roughly 3,500 of them and uses sampling to match the index’s sector and market-cap mix. The gap is small by design. What matters more is cost: VTI charges 0.03 percent a year, which is $3 a year on a $10,000 investment. Because the index is market-cap weighted, your dollars concentrate in the biggest companies. The top holdings include Apple, Nvidia, and Microsoft, so a few giants carry most of the weight while thousands of small stocks fill out the edges. You own the whole market, but you own much more of the big names.
What about it?
Understanding CRSP US Total Market Index helps you, an intelligent investor, better understand $VTI which is one of the most popular ETFs in the FI/RE community.
Winchell House 
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