SPDR Dow Jones Industrial Average ETF's DIA concentrated lineup and share-price-weighting scheme reduce the appeal of the fund's high-quality portfolio of industry leaders. It receives a Morningstar Analyst Rating of Neutral.

The fund replicates the Dow Jones Industrial Average Index, one of the oldest U.S. equity indexes. An index committee selects 30 stocks that best represent the U.S. equity market for index inclusion, with the exception of the utilities and transportation industries. The committee focuses on highly visible names with stable businesses and consistent growth. The resulting portfolio consists of profitable stocks that boast durable competitive advantages. The committee-based approach also allows more flexibility around reconstitution and generally keeps turnover under wraps. Despite its share-price-weighting scheme and concentrated portfolio, index performance has historically been highly correlated with the broader market.

Weighting constituents by their share price has no sound economic rationale. This approach is an artifact of the index’s late-19th-century origin and prevents very high- or low-priced shares from being added, even if they meet the committee's subjective criteria. The index assigns greater weights to holdings with higher share prices, regardless of their market caps or business fundamentals. This approach was convenient in an era without abundant computing resources, but it is far from best practice today.

The portfolio claims some of the market's strongest companies, but admitting just 30 stocks introduces significant stock-specific risk. More than 50% of assets are routinely allocated to the fund's top 10 holdings. UnitedHealth Group UNH takes the top spot, collecting nearly 10% of the portfolio alone as of Jan. 31, 2023. 

This fund does have its benefits. The index’s emphasis on stable and profitable companies has paid off during volatile periods. However, the index’s subjective construction and archaic weighting methodology may hurt its chances of delivering better risk-adjusted returns than the  large-value Morningstar Category average over the long term.

Analyst Rating

Old dog, same tricks.

Associate Analyst

Zachary Evens

UnitedHealth Group

Goldman Sachs

Microsoft

Home Depot

Caterpillar

Amgen

McDonald's

Visa

salesforce.com

Boeing

The fund provides exposure to a concentrated subset of U.S. market leaders. However, its share-price-weighting scheme and small lineup constrain the portfolio and elevate active risk, warranting a Below Average Process rating. 

The Dow Jones Industrial Average Index is a share-price-weighted index that tracks a selected group of 30 blue-chip U.S. stocks, excluding utilities and transportation companies. A three-person index committee singles out industry leaders from the S&P 500 to form the portfolio. Criteria are subjective, as the committee cites a firm's reputation, longevity, and investor interest among the factors it considers. This results in a portfolio of profitable and stable large-cap companies that aim to represent the entire U.S. stock market. The index reconstitutes on an as-needed basis at the committee's discretion, which has limited turnover. 

The fund is structured as a unit investment trust, which has some drawbacks. The portfolio managers cannot reinvest dividends or use derivatives to equitize cash. They are also prohibited from engaging in securities lending to generate additional income to offset expenses. 

The index's share-price-weighting scheme, 30-holding limit, and its committee’s subjective criteria put arbitrary constraints on this portfolio. The index does not consider some stocks whose share prices are very high or very low in order to protect the balance of the share-price-weighted portfolio, even if they meet the committee's other criteria. As of Jan. 31, 2023, 19 S&P 500 constituents had share prices above that of the fund's largest holding, UnitedHealth Group UNH, and 30 had a share price below the fund's smallest position, Intel INTC. While no guarantee of admission, these 49 names include recognizable companies like BlackRock BLK, Costco COST, and Ford F.

Below Average

Process

This portfolio is managed by the same team that manages State Street’s other equity index portfolios, under the leadership of Michael Feehily. Many members of the team have long tenures with State Street and are well-equipped to deliver strong index-tracking performance, supporting an Above Average People rating.

State Street’s equity index team is one of the largest in the industry, including 25 managers in the United States and 25 in other markets. On average, each manager runs between 20 and 25 portfolios. A dedicated index research team helps them prepare for index rebalancing and corporate actions, while its centralized global trading desk handles trades so managers can focus on index-tracking. Their workflow is largely automated to improve efficiency and minimize risk. SSGA uses an independent risk management team that reviews portfolios regularly. Tracking error is heavily emphasized in the management process and is one of the key components of manager evaluation.

Above Average

People

State Street Global Advisors is under new leadership but continues to move along the positive trajectory established by former leaders. SSGA maintains its Above Average Parent Pillar rating.
Cyrus Taraporevala, who oversaw much of SSGA’s recent transformation, retired from the CEO position in December 2022 and passed the baton to his successor, Yie-Hsin Hung. She inherited a business that’s become more disciplined with its fund lineup. Fees have come down, while product development remains focused on fixed-income and sustainability funds, and many of SSGA’s launches have echoed that intention.
The seeds that SSGA planted over the past several years have been bearing fruit. It built out a low-cost series of portfolio building-block ETFs in the U.S. bearing the “SPDR Portfolio” branding. SSGA launched these later than its industry rivals, so they aren’t as large. But they’re competitive, with solid management and low fees, which helped them consistently take in new money over the past several years.
SSGA continued to overhaul its ETF business in Europe with most of its recent fixed-income and sustainability fund launches. Many of these funds track indexes and charge relatively low fees. With operations in the U.S. and Europe standing on a firm foundation, SSGA will put more focus on its Asia-Pacific business—the smallest regional segment of its business.

Parent

SPDR Dow Jones Industrial Average ETF

DIA tracks a price-weighted index of 30 large-cap US stocks, selected by the editors of the Wall Street Journal.

iShares Core S&P 500 ETF

Invesco QQQ

U.S. markets and stock exchange traded funds retreated Wednesday, with once high-flying technology shares taking the brunt of the beating, as investors shifted to more economically sensitive sectors that could benefit from a broad recovery. On Wednesday, the Invesco QQQ Trust (NASDAQ: QQQ) fell 2.6%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was down 0.2%, [.

U.S. Stock ETFs Slide as Investors Shift Out of Growth Names

SPDR S&P 500 ETF Trust

Stocks and stock index ETFs were mixed to lower on Wednesday as bond yields climbed again. Stocks related to an economic recovery helped steady the market.

Stock ETFs Again Stumble on Rising Interest Rates

U.S. markets and stock exchange traded funds slipped Tuesday after a stellar first day of March. On Tuesday, the Invesco QQQ Trust (NASDAQ: QQQ) fell 0.6%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was up 0.1%, and iShares Core S&P 500 ETF (NYSEArca: IVV) was flat.

U.S. Stock ETFs Take a Breather after Monday Rally

After a strong start to March, stocks and index ETFs slipped on Tuesday, as tech stocks dragged down the market. The Dow Jones Industrial Average lost 100 points earlier in the session, but has since rebounded to tread water around breakeven.

After Their Best Performance Since June, Stock ETFs Slip on Tuesday

U.S. markets and stock exchange traded funds jumped Monday, heading toward their best one-day performance since June, as investors were encouraged by a stabilizing bond market, encouraging updates on the Covid-19 vaccine, and progress in fiscal stimulus. On Monday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 2.5%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) [.

U.S. ETFs Soar as Traders Refocus on Vaccines, Stimulus

Stocks and index ETFs are surging on Monday, as investors find relief from spiking Treasury yields last week, pushing inflationary concerns into the background to start the month. The Dow Jones Industrial Average popped 660 points, or 2.2%, while the S&P 500 added a similar 2.1% as all 11 sectors were positive to start March.

Stock ETFs Surge to Start March

Check your investment goals and risk tolerance to find the answer.

Is Now the Time to Invest in the Dow Jones?

ProShares Ultra Dow30

ProShares Short Dow30

This is a weekly series focused on analyzing the previous week's economic data releases.

Too Much Growth Is Killing Growth Stocks

U.S. markets and stock exchange traded funds were mixed Friday as technology stocks regained some of their lost ground. On Friday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 1.2%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) fell 0.7%, and iShares Core S&P 500 ETF (NYSEArca: IVV) was 0.2% higher.

U.S. Stock ETFs Try to Regain Lost Ground

Tech stocks are recovering from a precipitous drop in the prior session, after Treasury yields stabilized and an important inflation gauge showed more muted price pressures. After considerable volatility, the Nasdaq Composite popped 1.7% Friday, aided by moves in Apple, Facebook, and Microsoft of over 2%.

Stock ETFs Attempt to Stabilize Amid Tepid Inflationary Data

Investors were overall net purchasers of fund assets (including those of conventional funds and ETFs) for the third consecutive week. Equity ETFs witnessed their third consecutive week of net inflows - attracting $16.6 billion for the most recent fund-flows week.

U.S. Weekly FundFlows: Equity ETFs And Funds Take In Net New Money For Third Week In Row Despite Inflationary Concerns

U.S. markets and stock exchange traded funds plunged Thursday, with the technology-heavy Nasdaq set for its worst day in four months, as investors pulled out in response to a spike in U.S. bond yields. On Friday, the Invesco QQQ Trust (NASDAQ: QQQ) fell 3.5%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was down 1.7%, and [.

U.S. Stock ETFs Reel as Investors Trim Risk

iShares 10-20 Year Treasury Bond ETF

Stocks and ETFs have relinquished major gains made in the previous session, as spiking bond yields continue to cause problems for high-growth technology stocks. The Dow Jones Industrial Average dropped 410 points after closing at a record high in the previous session, losing more than 1.3%.

Stock ETFs Drop Again Amid Spiking Bond Yields

American Express

Chevron

While the S&P 500 and the Nasdaq Composite Index have been taking a hit from the tech and high-growth sell-offs, Dow Jones is roaring higher with cyclical sectors back in favor.

Dow Tops 32,000 for the First Time: 5 Best Stocks in the ETF

U.S. markets and stock exchange traded funds climbed Wednesday after Federal Reserve Chairman Jerome Powell reaffirmed his stance on keeping interest rates near zero and maintaining the central bank's supportive bond purchasing programs. On Wednesday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 0.6%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) rose 1.3%, and iShares [.

U.S. Stock ETFs Bounce after Powell Confirms Accommodative Fed Stance

Stock indexes and index ETFs reversed course this morning to trade higher on Wednesday, driven by renewed investor confidence in an economic resurgence. After more than a week of sideways to lower price action, the Dow Jones Industrial Average added 0.89% after falling over 100 points earlier in the day, helped by energy, industrial, and [.

Stock ETFs Reverse Their Slump on Powell Comments

U.S. markets and stock exchange traded funds pared early losses on Tuesday as a supportive Federal Reserve helped ease investor concerns. On Tuesday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 0.1%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) rose 0.4%, and iShares Core S&P 500 ETF (NYSEArca: IVV) was 0.4% higher.

U.S. Stock ETFs Bounce Back on a Supportive Fed Outlook

Stocks and index ETFs are falling for a sixth consecutive day on Tuesday, as fears of higher interest rates and a rotation into stocks linked to economic recovery are sinking technology. The Nasdaq Composite tumbled another 2.2%, dropping below its key 50-day moving average for the first time since November.

Stock ETFs Falling for a Sixth Consecutive Day

U.S. markets and stock exchange traded funds were mixed Monday, with technology stocks falling out as inflation concerns weighed on the once high-flying growth names. On Monday, the Invesco QQQ Trust (NASDAQ: QQQ) was down 2.4%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) rose 0.3%, and iShares Core S&P 500 ETF (NYSEArca: IVV) was 0.6% [.

Technology and Growth Sectors Drag on U.S. Stock ETFs

Stocks and index ETFs dropped again on Monday as rising bond yields stymied desires for riskier assets like growth technology stocks. The Dow Jones Industrial Average fell overnight in futures trading and is attempting to tread into positive waters Monday, as the S&P 500 remains down on the day 0.5%, falling for a fifth consecutive [.

Stock ETFs Continue to Decline Amid Rising Bond Yields

U.S. markets and stock exchange traded funds slipped Friday, giving up early morning gains. Investors continued to rotate out of heavy growth names and into more economically sensitive cyclical sectors.

U.S. Stock ETFs Waver as Cyclicals Gain Momentum

A winter storm rarely seen in the Lone Star State has knocked out power and water service for a large segment of the state population.

Texas in Trouble to End the Week

U.S. markets and stock exchange traded funds tried to pare early morning losses toward the end of Thursday's session. On Thursday, the Invesco QQQ Trust (NASDAQ: QQQ) was down 0.3%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) fell 0.2%, and iShares Core S&P 500 ETF (NYSEArca: IVV) was 0.3% lower.

U.S. Stock ETFs Try to Stabilize Themselves after Morning Losses

U.S. markets and stock exchange traded funds were mixed Wednesday with the technology-heavy Nasdaq falling behind on concerns over an overheating economy and potential policy changes that could rein in growth. On Wednesday, the Invesco QQQ Trust (NASDAQ: QQQ) was down 0.5%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was up 0.4%, and iShares Core [.

Inflation Fears and the Fed's Outlook Weigh on U.S. Stock ETFs

Retail Sales last month were expected to have come in around 1%, but instead reached +5.3% -- the highest read in consumer activity since June.

News for SPDR Dow Jones Industrial Average ETF ETF (DIA)