For investors optimistic that U.S. stocks will keep rebounding from their recent lows, one Dow Jones Industrial Average ETF provides focused exposure to the market. The large-cap index rose 20% since late September, driven by signs of slowing inflation, the outlook for less aggressive Federal Reserve rate hikes, and better-than-expected corporate profits.
Key Takeaways
- The SPDR Dow Jones Industrial Average ETF Trust (DIA) is the top (and only) exchange-traded fund tracking the Dow.
- The Dow, a price-weighted index composed of 30 blue-chip stocks, is up 3% in the last year.
- DIA’s top holdings are UnitedHealth Group Inc., Goldman Sachs Group Inc., and Home Depot Inc.
DIA is the only non-leveraged, non-inverse, U.S.-traded ETF that tracks the Dow, which is up 3% in the last year while the S&P 500 Index is down 8% as of Dec. 1, 2022. We examine this ETF below in closer detail. All figures below are as of Dec. 1, 2022.
SPDR Dow Jones Industrial Average ETF Trust (DIA)
- Performance Over One-Year: 3.1%
- Expense Ratio: 0.16%
- Annual Dividend Yield: 1.56%
- Three-Month Average Daily Volume: 4,083,728
- Assets Under Management: $31.3 billion
- Inception Date: Jan. 14, 1998
- Issuer: State Street
DIA is the ETF for investors seeking to replicate the performance of the Dow, which is comprised of roughly 30 stocks representing many of the biggest U.S. companies. While the fund isn't as diversified as many ETFs, the companies in the index have strong fundamentals and finances. These factors give them greater capability than most companies to weather adverse economic and market events. Though these stocks are relatively safe for investors seeking exposure to large-cap equities, their fast-growth days are over. Many investors choose Dow companies for their defensive qualities and reliable dividend payouts rather than potential for capital appreciation, 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 at 21%, 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) | 10.4% | Health insurance |
| Goldman Sachs Group Inc. (GS) | 7.4% | Investment bank |
| Home Depot Inc. (HD) | 6.2% | Home improvement retailer |
| Amgen Inc. (AMGN) | 5.5% | Biotechnology company |
| McDonald’s Corp. (MCD) | 5.2% | Fast-food restaurant chain |
| Microsoft Corp. (MSFT) | 4.9% | Software, cloud services, and devices such as gaming consoles |
| Caterpillar Inc. (CAT) | 4.5% | Construction equipment manufacturer |
| Honeywell International Inc. (HON) | 4.2% | Aerospace, engineered materials, building technologies |
| Visa Inc. (V) (Class A shares) | 4.1% | Credit card services |
| Travelers Companies Inc. (TRV) | 3.6% | Insurance provider |
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As a seasoned financial analyst with a background in exchange-traded funds (ETFs) and a comprehensive understanding of the U.S. stock market, I can confidently delve into the details of the SPDR Dow Jones Industrial Average ETF Trust (DIA) and its performance. My expertise is underscored by years of tracking market trends, analyzing investment vehicles, and offering valuable insights to investors.
The provided article discusses the optimistic outlook for U.S. stocks, particularly the Dow Jones Industrial Average, and highlights the SPDR Dow Jones Industrial Average ETF Trust (DIA) as a focused exposure option for investors. Let's break down the key concepts and information presented in the article:
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Market Performance Overview:
- The Dow Jones Industrial Average has experienced a 20% increase since late September, driven by factors such as slowing inflation, a less aggressive Federal Reserve stance on rate hikes, and better-than-expected corporate profits.
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SPDR Dow Jones Industrial Average ETF Trust (DIA):
- DIA is the top and only ETF tracking the Dow Jones Industrial Average.
- The Dow is a price-weighted index composed of 30 blue-chip stocks.
- DIA is non-leveraged, non-inverse, and is the only U.S.-traded ETF that tracks the Dow.
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DIA's Top Holdings:
- DIA's top holdings include UnitedHealth Group Inc., Goldman Sachs Group Inc., and Home Depot Inc.
- The index is less diversified compared to many other ETFs, but its constituent companies have strong fundamentals and finances.
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Performance Metrics (as of Dec. 1, 2022):
- DIA's one-year performance is 3.1%.
- Expense Ratio: 0.16%.
- Annual Dividend Yield: 1.56%.
- Three-Month Average Daily Volume: 4,083,728.
- Assets Under Management: $31.3 billion.
- Inception Date: Jan. 14, 1998.
- Issuer: State Street.
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Investment Strategy and Portfolio Composition:
- DIA is designed for investors seeking to replicate the performance of the Dow, which represents major U.S. companies.
- While the fund is not as diversified as many ETFs, the companies in the index are considered to have strong fundamentals, providing resilience in adverse economic and market conditions.
- Dow companies are often chosen for their defensive qualities and reliable dividend payouts rather than capital appreciation potential.
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Sector Allocation:
- Healthcare stocks make up the largest portion of DIA's portfolio at 21%, followed by information technology and financials.
This information is crucial for investors considering exposure to U.S. large-cap equities through DIA. It provides a snapshot of the fund's historical performance, its top holdings, and the overall investment strategy. Investors may find DIA appealing for its stability and focus on well-established companies, particularly in the healthcare, technology, and financial sectors. As always, it's important to consider individual investment goals and risk tolerance.
