SANTA MONICA, Calif. Jan. 27, 1998 (PRIMEZONE) -- The first official Wilshire 5000 Index mutual fund -- which seeks to provide individual and institutional investors exposure to the broad U. S. stock market through a single vehicle -- will be launched on Feb. 1, Wilshire Associates announced today.
The Wilshire 5000 Index, considered the broadest measure of the entire U. S. stock market, tracks all stocks trading on the NYSE, the AMEX, and the NASDAQ with readily available price information. More than 7,200 stocks are included in the Index.
"If there is anytime to invest in an index fund that provides broad market exposure -- exposure beyond simple large cap stocks -- now is it," said Tom Stevens, Senior Vice President and Co-Portfolio Manager. "Investors should remember one of the oldest and most important rules of the markets -- regression to the mean. If that law continues to hold true, the S&P 500 and other large cap indexes should have some periods of underperformance, making now a good time to consider the Wilshire 5000 Index fund."
Stevens pointed out that by the end of 1998, small cap stocks had lost all of the P/E premium, reaching valuations only seen in 1979 and 1990. At these previous points in history, small caps then proceeded to outperform large caps by 8 to 10 percentage points per year in the following three years. In the final two months of 1998, small caps began what may be the beginning of a small cap recover.
Unlike an S&P 500 Index fund, the Wilshire 5000 Index Portfolio seeks to capture the performance of small and mid-cap stocks, as well as large cap stocks. The Fund will seek to replicate the index while keeping transaction costs low, using statistical sampling procedures and ultimately about 2000 securities.
In addition to broad market exposure, Stevens added that the underperformance of traditional actively managed funds has generated interest in index funds, particularly among financial planners. On average, only about one-third of all U. S. equity funds have outperformed the Wilshire 5000 Index since 1984, based on three-year annualized returns. Experts have pointed out that the typical actively managed mutual fund underperforms the Wilshire 5000 Index by about two percentage points a year on average, not accounting for sales charges. Expense ratios on typical mutual funds average 1.4% while those on the average index fund run about 0.56%. Expenses on the Wilshire 5000 Index fund, after waiver, are expected to be 0.35% for both the institutional and retail classes, with a .20% 12b-1 fee for the retail class. The availability of the fund's shares on a no transaction fee (NTF) basis makes it the broadest market NTF fund offered within the retail mutual marketplace.
"We believe the Wilshire 5000 Index fund can be ideally suited as a core investment to a portfolio," said Stevens. "Investors may wish to continue using their favorite actively managed mutual funds as a compliment to a core Wilshire 5000 Index position, knowing that their core portfolio is designed to replicate the broad market."
Wilshire's objective with all of its mutual funds is to provide low cost, tax-efficient funds through the use of quantitative or "indexing" approaches. The firm, which helped pioneer index investing, believes these approaches may make the most sense for investors in relatively efficient markets, such as the U. S.
Wilshire works with financial advisors nationwide, providing them no-load investment fund vehicles, regular market insights, and seminars to enhance their technological capabilities and understanding of the markets. The firm's philosophy has been to take its knowledge of the institutional investment world -- where it has been a leader for more than 25 years -- and apply it to products available to individuals.
Shares in the fund are available in both individual and institutional classes with a minimum investment of $1,000. Wilshire also offers the Wilshire Target Funds Accumulation Plan, allowing investors to invest a minimum of $100 per transaction at selected intervals.
In addition to producing the Wilshire 5000 Index, Wilshire is a leader in investment technology and investment consulting. The firm advises on about $1 trillion in assets and directly manages about $10 billion in assets.
For more information, financial planners should call Steve Klein at 310-260-6768 or Mike Napoli at 310-260-6644.
Past performance is no guarantee of future results. For more complete information about the Wilshire 5000 Index fund, including fees and expenses, please obtain a prospectus by calling 1-888-200-6796. Please read it carefully before you invest or send money. The S&P 500 Index and the Wilshire 5000 Index are unmanaged and are designed to track 500 large cap stocks and the broad U. S. stock market, respectively. The Accumulation Plan does not assure a profit and does not protect against loss in declining markets. Distributor: First Data Distributors, Inc.