DEFINITION of 'Diamonds'

Diamonds are an extremely hard gemstone used mainly for jewelry, tools and as an investment in precious stones. Diamonds is also an informal term for an index-based exchange-traded fund (ETF) known as the SPDR Dow Jones Industrial Average ETF, which trades on the NYSEARCA exchange under the ticker symbol DIA. The ETF's objective is to provide returns that mirror the price and yield performance of the Dow Jones Industrial Average (DJIA).


Diamonds as gemstones are generally considered a poor investment vehicle, mainly due to the illiquidity of the market, a lack of price transparency, high transaction fees, and high risk related to quality assurance. Investors wanting exposure to diamonds could reduce some of the risk by owning GEMS, an ETF that invests in the diamond and gemstone industry. As of 2014, global diamond demand was increasing, due in large part to growing demand in emerging markets and in the United States. Many wealthy individuals consider diamonds a good investment because they are able to buy high-priced stones with relatively low transactions costs, and to enjoy the diamonds while they're value grows, as with antiques or art.

Launched in 1998, the Dow Diamonds exchange traded fund is managed by State Street Global Advisors. Since then, it has become popular among investors as a way of achieving approximately the same returns as owning the individual stocks underlying the Dow Jones Industrial Average (DJIA.) Investors can buy and sell shares of the ETF, the same as with common stocks. The fund's holdings consist of the 30 stocks in the DJIA, in the same price-weighted proportion as they appear in the DJIA, as well as some cash holdings.

The Popularity of the Diamonds ETF

Diamonds is a popular and generally well-regarded fund. Owning shares of Diamonds allows investors to attain the diversity of the DJIA with relatively low transaction fees. The fund is highly regarded for its relatively low gross expense ratio, which was 0.17%, as of the first quarter of 2016. Diamonds, like other ETFs, may offer some investors tax advantages over owning mutual funds. The fund's large size provides ample share liquidity, and investors can buy or sell shares anytime the exchange is open. The ETF's high market capitalization and liquidity has spawned a variety of options chains from which traders can choose. The NYSE allows investors to trade Diamond shares using margin, as well as to short-sell Diamond shares.

Diamonds ETF Statistics

As of April 2016, the fund had total net assets of about $12.3 billion, with about 68 million shares outstanding at a price per share of about $180. The fund's weighted average market cap was about $172 billion, at a price earnings ratio of about 18.7. Since its inception, the fund has yielded investors an annualized return of about 6.92%, as of the quarter ending March 2016.

  1. Porter Diamond

    The porter diamond is a model that attempts to explain the competitive ...
  2. Gemology

    The combined art and science of studying, cutting, valuing, buying ...
  3. Pula Fund

    The Pula Fund is a sovereign wealth fund established in 1994 ...
  4. Exchange-Traded Fund (ETF)

    An Exchange-Traded Fund (ETF) is a security that tracks an index, ...
  5. Index ETF

    Index ETFs are exchange-traded funds that seek to track a benchmark ...
  6. ETF Of ETFs

    ETF of ETFs are exchange-traded funds (ETF) that track other ...
Related Articles
  1. Managing Wealth

    Are Colored Diamonds a Girl's Best Friend?

    These gemstone kings of bling are trendier than ever. How to not get ripped off when buying a diamond.
  2. Tech

    De Beers Using Blockchain to Authenticate Diamonds

    De Beers will launch the first industry-wide blockchain platform in a bid to crack down on "conflict diamonds."
  3. Managing Wealth

    Introduction To Gemology

    Gemology as an investment alternative may seem glamorous, but it's not for the faint of heart.
  4. Investing

    Introduction to Exchange-Traded Funds

    Get into ETFs and enjoy the benefits of a mutual fund with the flexibility of a stock.
  5. Trading

    Introducing The Bearish Diamond Formation

    Profit-taking opportunities abound using this lesser-known pattern. Find out how.
  6. Personal Finance

    How Much Should You Spend on an Engagement Ring?

    The history and popular perception of engagement rings runs counter to the surprising correlation between ring cost and marriage success.
  7. Investing

    DIA vs. IWL: Comparing ETFs with the Largest U.S. Companies

    Find out how the SPDR Dow Jones Industrial Average ETF compares with the iShares Russell Top 200 as mega-cap exchange-traded funds.
  8. Investing

    ETFs: How Did We Live Without Them?

    These funds burst onto the scene in 1993 and have continued to provide new opportunities for investors since.
  1. What are common trading strategies when identifying a Diamond Top Formation Pattern?

    Learn how traders identify diamond top formations and what the pattern signifies. Then, develop a profitable trading strategy ... Read Answer >>
  2. How can marginal utility explain the 'diamond/water paradox'?

    Learn why a diamond is valued more highly than a bucket of water or why a professional athlete is valued more highly than ... Read Answer >>
  3. How are S&P 500 index components weighted?

    Learn about how components of the S&P 500 are weighted, and how this calculation favors certain stocks in being more representative ... Read Answer >>
  4. Who's in charge of managing exchange-traded funds?

    An exchange-traded fund (ETF) is a security that tracks an index but has the flexibility of trading like a stock. Just like ... Read Answer >>
  5. What does the S&P 500 index measure and how is it calculated?

    Learn about what exactly the S&P measures and why it's used by market participants as a tool to understand the broader stock ... Read Answer >>
Hot Definitions
  1. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  2. Liquidity

    Liquidity is the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's ...
  3. Federal Funds Rate

    The federal funds rate is the interest rate at which a depository institution lends funds maintained at the Federal Reserve ...
  4. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  5. Standard Deviation

    A measure of the dispersion of a set of data from its mean, calculated as the square root of the variance. The more spread ...
  6. Entrepreneur

    An entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture.
Trading Center