real-time news and commentary for investors
Tuesday, Sep 10
Change coming to DJIA weighting?
- Notably not included in this morning's new additions to the Dow Jones Industrial Average were Apple and Google. "We had to think about it, but the arithmetic doesn't work," S&P's David Blitzer tells CNBC. Blitzer hints of a possible change coming to the Dow weighting scheme.
- The DJIA is currently price-weighted, meaning the share price is more important to a company's weight in the index rather than market cap. A back-of-the-envelope calculation finds Apple would be about 30% of the Dow were it added!
- Indeed an S&P Dow Jones statement says the low share price of Alcoa (AA), Bank of America (BAC), and H-P (HPQ) was a key reason for their removal.
- The real-money impact on those removed and added (GS, NKE, V) won't be huge as a relatively small amount of money is indexed to the DJIA. The DIA has about $12B in AUM vs. the SPY with $136B.
- ETFs: DDM, UDOW, DXD, SDOW, DOG.