Ever felt like the stock market is a puzzle missing a few pieces? You know the big names—Apple, Amazon, and Microsoft—but what about the rest of the companies driving America’s economy? That’s where the Dow jones completion index steps in. It’s like the backstage pass to the U.S. stock market—the stuff that doesn’t make the headlines but still plays a big role.
Let’s dive in and unpack this hidden gem of an index.
Understanding the Dow Jones Completion Index
What Exactly Is It?
The Dow Jones U.S. Completion Total Stock Market Index, often called the Dow jones completion index, includes all U.S. stocks not in the S&P 500. T
hat’s right—this index completes what the S&P 500 starts. While the S&P 500 focuses on large-cap companies, the Completion Index scoops up mid-cap and small-cap stocks.
Think of it this way: If the S&P 500 is the headliner at a concert, the Completion Index is the opening acts and the indie bands that keep the show alive.
How It Differs from the Dow Jones Industrial Average (DJIA)
The DJIA includes just 30 of the biggest companies, and it’s price-weighted (weird, right?). Meanwhile, the Completion Index is market-cap weighted and way more comprehensive, covering thousands of companies.
The Backbone: How the Index Is Constructed
Inclusion Criteria
T be in the Completion Index, a company must be:
-
U.S.-based
-
Publicly traded
-
Not part of the S&P 500
Simple rules, but the result? A broad and deep mix of companies.
Sector Representation
You get exposure to a range of sectors:
Tech, Health, Energy, and More
From up-and-coming tech startups to biotech innovators and energy explorers, the index is a smorgasbord of industries.
Why Should You Care?
Investment Diversification
Investing solely in large-cap stocks can leave your portfolio lopsided. The Completion Index brings in the rest of the gang—companies with high growth potential that might be flying under the radar.
Capturing Mid and Small Caps
Mid and small caps often outpace large caps during economic rebounds. If you want that upside potential, this index is your go-to.
Who Uses the Dow Jones Completion Index?
Passive Investors
This index is a favorite among passive investors looking to replicate the full U.S. market (excluding the top dogs).
Index Funds and ETFs
Plenty of index funds and ETFs track the Completion Index because it’s cheap, efficient, and powerful for long-term investing.
Popular Funds That Track It
Vanguard Extended Market Index Fund (VEXAX/VXF)
One of the most well-known options, Vanguard’s fund gives you low-cost access to the index.
Fidelity Extended Market Index Fund (FSMAX)
Another big player, this Fidelity fund is a top choice for many retirement accounts.
Benefits of Tracking This Index
Broader Market Exposure
By combining the S&P 500 with the Completion Index, you’ve got almost the entire investable U.S. equity market covered.
Complements the S&P 500
It’s called the “completion” index for a reason—it fills in the gaps that the S&P 500 leaves behind.
Performance History and Trends
Long-Term Returns
Historically, the Completion Index has delivered solid long-term returns, often matching or even exceeding the S&P 500 during certain market cycles.
Volatility Snapshot
Because of its exposure to smaller companies, it can be more volatile. But with that risk comes the chance for higher reward.
Comparing It to Other Indexes
S&P 500 vs. Dow Jones Completion Index
The S&P 500 = big guys.
The Completion Index = everyone else.
Put them together? You’ve got the total market.
Russell 2000 vs. DJ Completion Index
The Russell 2000 focuses only on small caps, while the Completion Index includes both mid and small caps—a more balanced approach.
Risk Factors You Should Know
Market Volatility
Smaller companies are more sensitive to economic swings. When the market dips, these stocks can fall hard.
Sector Overweight Risk
Some sectors may be overrepresented at times, like tech or biotech, increasing exposure to specific industries.
How to Invest in the Dow Jones Completion Index
Direct vs. Indirect Investing
You can’t directly buy the index, but you can invest through ETFs or mutual funds that mimic its performance.
Tax Efficiency Considerations
Index funds tracking the Completion Index tend to be tax-efficient, making them great for taxable accounts.
Myths and Misunderstandings
It’s Not Just “Everything Else”
Yes, it excludes the S&P 500, but that doesn’t mean it’s just leftovers. These companies are often dynamic, growing, and innovative.
Misconceptions Around Performance
Some think it underperforms the S&P 500. That’s not always true—especially in bull markets where smaller companies shine.
Is It Right for You?
Evaluating Your Risk Tolerance
If you can stomach a little more risk for higher potential growth, the Completion Index deserves a spot in your portfolio.
Portfolio Goals
Trying to match the entire U.S. stock market? Pair the S&P 500 with a Completion Index fund, and you’re pretty much there.
Final Thoughts
The Dow jones completion index isn’t flashy. It won’t make the evening news like the S&P 500 or DJIA. But it’s a powerful investment tool that captures a huge chunk of the U.S. economy that most people overlook. If you’re serious about broad diversification, long-term growth, and building a resilient portfolio, this index is your quiet MVP.
FAQs
1. Is the Dow Jones Completion Index good for beginners?
Yes! If you’re investing for the long term, it’s a great way to diversify beyond just large-cap stocks.
2. Can I buy the Dow Jones Completion Index directly?
Not directly, but you can invest in index funds or ETFs like VXF or FSMAX that track it.
3. Is it better than the S&P 500?
Not necessarily better—just different. It complements the S&P 500 by adding more depth to your portfolio.
4. What’s the risk level of this index?
Moderate to high. It includes smaller companies, which can be more volatile but also offer more growth potential.
5. How often is the index updated?
The index is rebalanced quarterly to ensure it accurately reflects its investment universe.
