Spotlight on the SPDR Dow Jones Industrial Average ETF

Nov.18.10 | About: SPDR Dow (DIA)

ETF Spotlight on the SPDR Dow Jones Industrial Average (NYSEArca: DIA), part of a weekly series.

Assets: $8 billion

Objective: Tracks the Dow Jones Industrial Average, one of the best-known and widely-followed indexes in the world

Holdings: The largest corporations in the world can be found in the Dow Jones Industrial Average, including IBM, 3M (NYSE: MMM), Chevron (NYSE: CVX) and Caterpillar (NYSE: CAT).

What You Should Know

  • The Dow Jones Industrial Average is made up of 30 large-cap stocks that are thought to represent the broad market. Most retail investors watch this index, and it is the one you will be most likely to hear referred to by the popular press. DIA is very liquid, trading over 10 million shares per day on average.
  • The Dow uses a divisor – not just dividing by 30 – that is gauged to make the Dow’s average equivalent to past levels due to shifts in its composition.
  • Additionally, the Dow is weighted by each stock’s share price – higher priced stocks have a larger impact on the Dow’s movement.
  • This price-weighting methodology may result in smaller companies with a larger impact on the Dow’s movement because the smaller company trades at a higher price, which differs from some other indexes that weight holdings based on market capitalization.

The Latest News

  • The Dow is still above its 200-day moving average, though in the last two weeks, it has lost 1.5%.
  • IBM is currently the largest company in the index, with 9.7% of the weighting. 3M, Chevron, Caterpillar, McDonald’s (NYSE: MCD) and United Technologies (NYSE: UTX) each get about 5% of the weighting.
  • General Electric (NYSE: GE) is the only original Dow component.

click to enlarge

Dow Jones Industrial Average ETF, DIA

Disclosure: None