The Dow Jones Industrial Average (DJIA), created by Charles Dow in 1896, is one of the oldest U.S. market indexes. It is commonly referred to as “the Dow” and stands alongside the S&P 500 and Nasdaq Composite as one of the three main indexes tracking U.S. equities, despite being both smaller in size—it’s composed of 30 blue-chip stocks—and price-weighted as opposed to capitalization (cap)-weighted.
Those differences, however, do not keep the Dow from being used by many investors as a proxy for the health of the broader U.S. economy.
- The Dow Jones Industrial Average is a price-weighted index composed of 30 blue-chip stocks.
- The Dow has underperformed the S&P 500 over the past year.
- The SPDR Dow Jones Industrial Average ETF Trust (DIA) is the best (and only) exchange-traded fund tracking the Dow.
- DIA’s top holdings are UnitedHealth Group Inc., Goldman Sachs Group Inc., and Home Depot Inc.
Investors seeking to capitalize on the Dow without buying individual stocks may consider investing in an exchange-traded fund (ETF). These funds hold baskets of securities to provide efficiency and portfolio diversity, a key ingredient for reducing risk.
The Dow posted a total return of 30.7% in the 12 months leading up to Aug. 11, 2021, which is less than the total return of 35.5% delivered by the S&P 500 over the same time frame. Currently, the SPDR Dow Jones Industrial Average ETF Trust (DIA) is the only non-leveraged and non-inverse ETF that tracks the Dow.
We examine this ETF below in closer detail. All figures are as of Aug. 11, 2021.
- Performance Over One-Year: 30.4%
- Expense Ratio: 0.16%
- Annual Dividend Yield: 1.57%
- Three-Month Average Daily Volume: 3,838,628
- Assets Under Management: $30.8 billion
- Inception Date: Jan. 14, 1998
- Issuer: State Street Global Advisors
DIA is the ETF for investors seeking to replicate the performance of the Dow, which tracks the stocks of some of the largest companies in the U.S. economy. The fund may not be as diversified as most ETFs because it holds just 30 stocks, but these stocks belong to companies with strong fundamentals and finances. These factors give them greater capability than most companies to weather extremely adverse economic and market events.
While these stocks are relatively safe, their fast-growth days are largely behind them. Many investors choose Dow companies for their defensive qualities and reliable dividend payouts, rather than explosive capital appreciation potential, with DIA remaining a popular choice for investors looking for relatively safe exposure to large-cap U.S. equities.
Below, we’ll look at the top 10 holdings for DIA.
|Top DIA Holdings|
|Company Name (Ticker)||Percentage of DIA Assets||Company Description|
|UnitedHealth Group Inc. (UNH)||7.8%||Health insurance|
|Goldman Sachs Group Inc. (GS)||7.1%||Investment bank|
|Home Depot Inc. (HD)||6.2%||Home improvement retailer|
|Microsoft Corp. (MSFT)||5.4%||Software, cloud services, and devices such as gaming consoles|
|Visa Inc. (V) (class A shares)||4.6%||Credit card services|
|McDonald’s Corp. (MCD)||4.6%||Fast-food restaurant chain|
|Salesforce.com Inc. (CRM)||4.6%||Cloud-based enterprise software|
|Amgen Inc. (AMGN)||4.6%||Biotechnology company|
|Honeywell International Inc. (HON)||4.4%||Aerospace, building and performance technologies, and safety solutions|
|Boeing Co. (BA)||4.3%||Aerospace and telecommunications manufacturer|
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