Note: This index has been discontinued by Wilshire. We are keeping this definition in the glossary because it was used in the creation of the Asset Class Assumptions that Morningstar uses in planning.
The Wilshire Midcap Value index is a market cap weighted index including securities from the Wilshire Mid Cap 500 index with value characteristics as defined by Wilshire. The index is an excellent way to evaluate this sector of the market and to gauge the performance of managers focusing on this particular style. An equal weighting of this index, along with the Wilshire Mid Cap Growth index, results in approximately the same return as the Wilshire Mid Cap 500 index.
Key variables used by the value portfolios include price/earnings ratio, price/book ratio, and yield. Variables employed for the growth portfolio screenings include sales growth, return on equity, and dividend payout. The orientation of each style portfolio is one that eliminates those companies that do not fit the style by utilizing the various criteria selected, as opposed to establishing explicit cutoffs for each measure. All criteria are relative so that the portfolios are not affected by the changing levels of these measures during different market periods. This process ensures that each style focus is constantly maintained. The returns we publish for the index are total returns, which include reinvestment of dividends.