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.
- The Dow has dramatically underperformed the S&P 500 over the past year.
- DIA is the best (and only) ETF tracking the Dow.
- DIA's top holdings include UnitedHealth Group Inc., Goldman Sachs Group Inc., and Home Depot Inc.
The Dow has experienced heightened volatility over the past year as a result of market turbulence caused by the COVID-19 pandemic, uncertainty over the U.S. presidential election, 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 February 3, 2021, the Dow has underperformed the S&P 500 over the past 12 months with a total return of 10.7% compared to 20.0%, respectively. Below, we look at the one ETF that tracks the Dow. All figures below are as of Feb. 7, 2021.
- Performance over 1-Year: 8.4%
- Expense Ratio: 0.16%
- Annual Dividend Yield: 1.84%
- 3-Month Average Daily Volume: 3,422,389
- Assets Under Management: $25.7 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 31 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|
|UnitedHealth Group Inc. ( UNH)||7.2%||Health insurance|
|Goldman Sachs Group Inc. ( GS)||6.2%||Investment bank|
|Home Depot Inc. ( HD)||5.9%||Home improvement retailer|
|Microsoft Corp. ( MSFT)||5.2%||Software, cloud services, and devices such as gaming consoles|
|Amgen Inc. ( AMGN)||5.1%||Biotechnology company|
|Salesforce.com Inc. ( CRM)||5.0%||Customer relationship management software|
|McDonald's Corp. ( MCD)||4.5%||Fast food restaurants chain|
|Boeing Co. ( BA)||4.4%||Aerospace and telecommunications manufacturer|
|Visa Inc. ( V) (class A shares)||4.3%||Credit card services|
|Honeywell International Inc. ( HON)||4.3%||Aerospace, building and performance technologies, and safety solutions|
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Business Insider. "DOW JONES DJIA VIX (VOLATILITY)." Accessed Feb. 7, 2021.
YCharts. "Financial Data." Accessed Feb. 7, 2021.
ETFdb.com. "Dow Jones Industrial Average (INDEXDJX DJI) – ETF Tracker." Accessed Feb. 7, 2021.
ETFdb.com. "SPDR Dow Jones Industrial Average ETF." Accessed Feb. 7, 2021.