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 the 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 investors from using the Dow as a proxy for the health of the broader U.S. economy.
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 Jones Industrial Average (DJIA or the Dow) is a price-weighted index composed of 30 blue-chip stocks.
- The Dow has outperformed 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.
The Dow posted a total one-year trailing return of -8.6%, above the total return of -11.0% delivered by the S&P 500, as of Sept. 1, 2022. Though there is another fund based on the Dow—the ProShares Ultra Dow 30 (DDM)—it is a leveraged ETF that seeks to deliver daily investment results that are double the daily performance of the Dow. Currently, the SPDR Dow Jones Industrial Average ETF Trust (DIA) is the only non-leveraged, non-inverse, U.S.-traded ETF that tracks the Dow. We examine this ETF below in closer detail. All figures below are as of Sept. 1, 2022. In order to focus on a fund’s investment strategy, the top holdings listed for ETFs exclude cash holdings and holdings purchased with securities lending proceeds except under unusual cases, such as when the cash portion is exceptionally large.
- Performance Over One-Year: -8.7%
- Expense Ratio: 0.16%
- Annual Dividend Yield: 1.56%
- Three-Month Average Daily Volume: 3,161,526
- Assets Under Management: $27.4 billion
- Inception Date: Jan. 14, 1998
- Issuer: State Street
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 only roughly 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. Though 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. Healthcare stocks make up the largest portion of the portfolio, followed by information technology and financials. 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)||10.9%||Health insurance|
|Goldman Sachs Group Inc. (GS)||7.0%||Investment bank|
|Home Depot Inc. (HD)||6.0%||Home improvement retailer|
|Microsoft Corp. (MSFT)||5.5%||Software, cloud services, and devices such as gaming consoles|
|McDonald’s Corp. (MCD)||5.3%||Fast-food restaurant chain|
|Amgen Inc. (AMGN)||5.0%||Biotechnology company|
|Visa Inc. (V) (Class A shares)||4.2%||Credit card services|
|Honeywell International Inc. (HON)||4.0%||Aerospace, engineered materials, building technologies|
|Caterpillar Inc. (CAT)||3.9%||Construction equipment manufacturer|
|Travelers Companies Inc. (TRV)||3.4%||Insurance provider|
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