You probably own the S&P 500. Most people do. It’s the default setting for American investing, a massive collection of the 500 biggest companies in the country. But here is the thing: if that is all you have, you are basically ignoring thousands of companies that actually drive a huge chunk of innovation. This is where the US Dow Jones Completion Index comes in. It is exactly what it sounds like. It completes the picture.
Think of the US stock market as a giant puzzle. The S&P 500 is the middle of the puzzle—the big, easy-to-see pieces. The US Dow Jones Completion Index represents every other piece on the table. It tracks the stocks that aren't in the S&P 500. We are talking about mid-cap grinders, small-cap innovators, and those "boring" companies that keep the lights on but never make the nightly news.
What the Index Actually Tracks
The US Dow Jones Completion Index is a sub-index of the Dow Jones US Total Stock Market Index. If you take the total market and subtract the S&P 500, you are left with this "completion" set. It captures roughly 3,000 to 4,000 stocks, depending on the current market fluctuations.
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It's market-cap weighted. This means the bigger "small" companies have more influence than the tiny ones. You'll find names in here that you actually recognize, like Uber (before it migrated to the S&P), Workday, or Snowflake. But you also find the "zombies" and the micro-caps. It’s a wild mix. Honestly, it’s much more reflective of the "real" economy than a list of the 10 biggest tech giants that currently dominate the headlines.
Why Investors Ignore It (And Why That's a Mistake)
Small caps have had a rough decade. Let’s be real. If you’ve been chasing returns since 2014, the S&P 500 has likely trounced the US Dow Jones Completion Index. Big Tech—the Mag Seven—pushed the large-cap indices to heights that felt disconnected from reality.
But markets move in cycles. Always.
When interest rates were near zero, big companies with massive cash piles thrived. Now that we are in a "higher for longer" or at least a "volatile" rate environment, the valuation gap between the giants and the rest of the market has become a canyon. The US Dow Jones Completion Index is currently trading at valuations that look like a bargain compared to the historical highs of the S&P 500. If you believe in "reversion to the mean," this index is where the action is likely to happen over the next five to ten years.
The Nuance of "Completion" vs. "Total Market"
People get confused here. They ask, "Why not just buy a Total Stock Market fund?"
That’s a fair question.
If you buy a Total Market fund (like VTI), you are getting the whole thing in one bag. But many people already have a 401(k) that only offers an S&P 500 tracker. If you add more Total Market funds on top of that, you are actually "overweighting" the big guys. You’re doubling down on Apple and Microsoft. By using a fund that tracks the US Dow Jones Completion Index, you are surgically adding the missing flavor without ruining the recipe. It’s for the person who wants precision.
Breaking Down the Sector Exposure
The sector weightings in this index look nothing like the S&P 500. In the big index, Technology is the king, queen, and court jester. In the completion index, you get a much heavier dose of Industrials, Financials (specifically regional banks), and Real Estate.
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- Industrials: You’re looking at trucking companies, specialized manufacturers, and aerospace parts suppliers.
- Financials: This isn't JP Morgan. It’s the bank down the street or the mid-sized insurance firm that handles niche risks.
- Consumer Discretionary: These are the retailers that haven't hit "mega" status yet but dominate their specific regions.
Because there is less "bloat" from the trillion-dollar tech companies, the index reacts differently to economic news. When the labor market is tight or manufacturing picks up, the completion index often feels it first.
How to Actually Invest in It
You can’t buy an index directly. You have to buy a product that tracks it. The most famous one is the Vanguard Extended Market ETF (VXF). There are others from iShares and Fidelity, but VXF is the big dog in this space.
It’s cheap. Usually, the expense ratio is around 0.06%. That means for every $10,000 you invest, you pay six bucks a year. That’s a steal for access to 3,500 companies.
Historically, this index has more volatility. It swings harder. When the market panics, the small and mid-sized companies get sold off faster because they are seen as "riskier." But when the recovery starts, they often "moon" much faster than the blue chips. You have to have a stomach for it. If seeing your portfolio drop 5% in a week makes you want to vomit, stay away.
Common Misconceptions About the Dow Jones Names
One thing that trips people up is the name "Dow Jones." We all know the Dow Jones Industrial Average—those 30 stocks that reporters talk about on the 6 o'clock news. Forget that. The US Dow Jones Completion Index has nothing to do with those 30 stocks. It’s part of a much broader family of indices managed by S&P Dow Jones Indices.
It is also not just "Small Caps."
The Russell 2000 is the famous small-cap index. But the US Dow Jones Completion Index includes Mid-Caps too. It’s the middle-child and the baby of the market combined. This "Mid-Cap" exposure is actually the "sweet spot" for many institutional investors because these companies have proven business models but still have room to double or triple in size.
The Role of Passive vs. Active Management
There is a huge debate about whether you should just buy the index or pick an active manager for this part of the market. The argument for active management is that with 3,500 stocks, there is a lot of "trash." An active manager can theoretically filter out the companies that are drowning in debt.
However, the data usually shows that over 10+ years, the index wins. Fees eat your gains. By sticking with the US Dow Jones Completion Index through a low-cost ETF, you’re betting on the broad American economy rather than one guy’s ability to find the "next big thing."
Real-World Example: The "Rebalancing" Effect
What happens when a company in the completion index becomes a massive success?
Think about Tesla or Palo Alto Networks. They spent years in the "extended market." If you owned the US Dow Jones Completion Index, you rode that wave up. Then, once they got big enough and met certain criteria, the S&P 500 "called them up to the big leagues."
When this happens, the completion index sells the stock (usually at a huge profit relative to where it started) and reinvests in the next batch of small growers. It’s a natural cycle of "farming" success. You are essentially holding the "on-deck circle" for the S&P 500.
Actionable Steps for Your Portfolio
Don't just go out and dump all your money into an extended market fund tomorrow. That's a recipe for stress. Instead, look at your current allocation.
- Check your overlap. Use a tool like Morningstar’s X-Ray or even a simple portfolio visualizer. See how much of your money is tied up in the top 10 stocks of the S&P 500. If it's more than 25%, you are highly concentrated.
- Determine your "Completion" ratio. A common "market weight" strategy is roughly an 80/20 split. 80% in the S&P 500 and 20% in the US Dow Jones Completion Index. This gives you a mix that looks almost exactly like the Total Stock Market.
- Consider the tax implications. If you are doing this in a taxable brokerage account, remember that switching funds creates a taxable event. It might be better to direct new money into the completion index rather than selling old winners.
- Watch the Fed. Small and mid-caps are sensitive to interest rates because they often carry more floating-rate debt than giants like Apple. If you think rates are going to drop, the completion index is positioned to be a primary beneficiary.
The US Dow Jones Completion Index isn't flashy. It doesn't have the "AI hype" of the Nasdaq 100 or the "prestige" of the Dow 30. But for a diversified investor who wants to actually own the American engine—not just the shiny hood ornament—it is an essential tool. It’s the difference between betting on a few star players and betting on the whole league. Over the long run, the league usually finds a way to win.
Strategic Insights for Implementation
- Risk Assessment: Recognize that this index carries a higher "beta" (volatility) than the S&P 500; ensure your time horizon is at least 5-7 years to smooth out the cycles.
- Rebalancing Frequency: Check your allocation annually. Because small caps can grow rapidly or crash hard, your 80/20 split can quickly become 90/10 or 70/30.
- Dividend Reality: Don't buy this for the yield. While many mid-caps pay dividends, the index yield is typically lower than the S&P 500 because many constituents are reinvesting cash for growth.