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. But unlike those other two, the Dow is relatively small in size, comprised of 30 blue-chip stocks, and is price weighted as opposed to 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 comprised of 30 blue-chip stocks.
- DIA is the best (and only) ETF tracking the Dow.
- DIA's top holdings include Apple, UnitedHealth Group, and Home Depot.
- The Dow's total return over the past year is 7.7% compared to the S&P 500's total return of 17.4%.
The Dow has recently faced intense volatility due to fears surrounding the coronavirus pandemic and other global geopolitical developments. 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 in order to provide efficiency and portfolio diversity as a means of reducing risk.
The SPDR Dow Jones Industrial Average ETF (DIA) is currently the only non-leveraged ETF that tracks the Dow. As of August 10, 2020, the Dow has dramatically underperformed the S&P 500 with a total return of 7.7% compared to 17.4%, respectively. Below, we look at the one ETF that tracks the Dow. All figures below are as of August 11, 2020.
- Performance over 1-Year: 8.1%
- Expense Ratio: 0.16%
- Annual Dividend Yield: 2.18%
- 3-Month Average Daily Volume: 4,297,086
- Assets Under Management: $22.9 billion
- Inception Date: January 14, 1998
- Issuer: State Street SPDR
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 and many investors like them for reliable dividend payouts. DIA thus remains 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|
|Apple Inc. (AAPL)||11.1%||Consumer electronics|
|UnitedHealth Group Inc. (UNH)||7.9%||Health insurance|
|Home Depot Inc. (HD)||6.8%||Home improvement retailer|
|Goldman Sachs Group Inc. (GS)||5.2%||Investment bank|
|Microsoft Corp. (MSFT)||5.1%||Software and gaming console maker|
|McDonald's Corp. (MCD)||5.0%||Fast food|
|Visa Inc. (V)||4.9%||Credit card services|
|Boeing Co. (BA)||4.4%||Aircraft manufacturer|
|3M Co. (MMM)||4.0%||Consumer goods and industrial conglomerate|
|Johnson & Johnson (JNJ)||3.7%||Consumer goods, medical, pharmaceuticals|
YCharts. "Financial Data." Accessed Aug. 10, 2020.
ETFdb.com. "Dow Jones Industrial Average (INDEXDJX DJI) – ETF Tracker." Accessed Aug. 11, 2020.
ETFdb.com. "SPDR Dow Jones Industrial Average ETF." Accessed Aug. 11, 2020.