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.

Invesco QQQ

SPDR S&P 500 ETF Trust

Two Senate runoffs in Georgia are scheduled for January. If Republicans retain both those seats, the government will be divided, with Democrats controlling the presidency and the House while the GOP clings to a slight Senate majority.

Why Stock ETFs Don't Care About Government Gridlock

American Express

Chevron

Disney

Amid rising COVID-19 cases, the Dow Jones wrapped up its best month in more than 30 years after hitting the major milestone of 30,000 for the first time last week.

5 Stocks in Dow ETF That Powered the Best Month Since 1987

iShares Core S&P 500 ETF

Stocks and index ETFs are attempting to make a run following the Thanksgiving holiday, as Black Friday looks to close out a robust week of gains. The Dow Jones Industrial Average added 38 points, or 0.1% before pulling back to breakeven.

Stock ETFs Look To Maintain Robust Month On Black Friday

Index ETFs are mixed to lower on Wednesday, amid discouraging economic data and more muted stock movement, following the achievement of a key milestone for the Dow Jones Industrial Average on Tuesday. The Industrial Average fell 224 points, or 0.8%, after breaking 30,000 for the first time on Tuesday.

Stock ETFs Cool Down after Record Dow Milestone

U.S. markets and stock exchange traded funds were mixed Wednesday, with the S&P 500 and Dow Jones Industrial Average slipping from their record highs, on signs that the recovery in the labor market is slowing amid a spike in coronavirus cases. On Wednesday, the Invesco QQQ Trust (NASDAQ: QQQ) rose 0.4%, SPDR Dow Jones Industrial Average [.

U.S. Stock ETFs Waver as Cyclicals Slip on Short-Term Concerns

The Dow Jones topped the 30,000 milestone for the first time on vaccine optimism, and improving prospects for the smooth transition of President-elect Joe Biden to White House.

Dow Tops 30,000: 5 Stocks Driving the ETF

Wall Street seemed super-excited as the Dow Jones reached 30,000 for the first time in history on Nov 24.

Dow Hits 30K for First Time: 7 Stocks Driving the ETF Rally

U.S. markets and stock exchange traded funds continued to push higher on Tuesday, with the Dow Jones Industrial Average breaking above the 30,000 level for the first time, as promising coronavirus vaccine results helped maintain momentum. On Tuesday, the Invesco QQQ Trust (NASDAQ: QQQ) rose 1.4%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was up [.

U.S. Stock ETFs Rally as Dow Breaks 30,000 for First Time

After a challenging week last week, the Dow Jones Industrial Average and S&P 500 are attempting to climb higher on Monday after positive vaccine news from AstraZeneca and the University of Oxford. The biotech giant said their coronavirus vaccine was as much as 90% effective, although data varied, making it the latest vaccine this month [.

Stock ETFs Climb Amid More Vaccine Positive Data

U.S. markets and stock exchange traded funds strengthened Monday, with cyclicals and more economically sensitive sectors leading the charge, after promising results from the latest coronavirus vaccine candidate helped fuel optimism over a gradual economic recovery. On Monday, the Invesco QQQ Trust (NASDAQ: QQQ) rose 0.8%, the SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was up [.

U.S. Stock ETFs Strengthen with Investors Shifting to Cyclicals

The highest-priced equities in the Dow Jones Industrial Average determine the immediate direction for index values. The 10 highest-priced names account for 53% of current daily performance.

The Dow Industrial Price-Weighting Design Skews Performance

U.S. markets and stock exchange traded funds slipped Friday as the spike in coronavirus cases threaten widespread shutdowns that would upend the economic recovery. On Friday, Invesco QQQ Trust (NASDAQ: QQQ) rose 0.8%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was up 0.2%, and iShares Core S&P 500 ETF (NYSEArca: IVV) gained 0.5%.

U.S. Stock ETFs Take a Pause as Coronavirus Cases Rise

U.S. markets and stock exchange traded funds recovered toward the end of Thursday's session after starting poorly in the early morning. On Thursday, Invesco QQQ Trust (NASDAQ: QQQ) rose 0.8%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was up 0.2%, and iShares Core S&P 500 ETF (NYSEArca: IVV) gained 0.5%.

U.S. Stock ETFs Pare Down Early Morning Losses

Stocks and index ETFs are struggling again on Thursday in mixed trade, amid lackluster U.S. unemployment data and spiking Covid-19 infections, but financial experts are still optimistic due to recent vaccine developments. The Dow Jones Industrial Average and S&P 500 continued to drop for the third consecutive day, with the Dow giving up almost 200 points.

Stock ETFs Mixed-To-Lower, But Pundits Express Optimism

Stock indexes and ETFs are mixed on Wednesday, as investors contemplated sanguine news concerning a coronavirus vaccine. Stock indices are attempting to recover gains made on Monday, with the Dow Jones Industrial Average adding 120 points, or 0.41%, while the S&P 500 and Nasdaq Composite are both treading water near breakeven on Wednesday.

Stock ETFs Trade Mixed Despite Encouraging Vaccine Developments

U.S. stocks and index ETFs are attempting to recover after dropping on Tuesday due to a precipitous fall in drug store stocks and lackluster economic data. The Dow Jones Industrial Average tumbled 177 points, or 0.6%, to give back most of Monday's gains.

Stock ETFs Stumble Amid Lackluster Economic Data

Cisco Systems

Walgreens

The Dow Jones hit all-time highs since February, marking its fastest bear market recovery in 30 years.

Dow ETF Hits New Highs on Vaccine Optimism: 5 Best Stocks

US stocks and index ETFs jumped Monday, amid news of a highly effective coronavirus vaccine trials from Moderna, sending the Dow Jones hurtling toward 30,000 points. The Dow Jones Industrial Average added almost 400 points, or 1.3%, while the S&P 500 advanced 0.91% and Nasdaq Composite climbed 0.54%.

Stock ETFs Rally On Moderna News, Sending Dow Toward 30,000

Stocks and index ETFs are falling on Thursday, as markets continue to face headwinds after making substantial gains earlier in the week. U.S. coronavirus cases continue to climb.

Stock ETFs Fall as Covid-19 Cases Continue to Surge

SPDR S&P Bank ETF

SPDR S&P Oil & Gas Exploration & Production ETF

With a potentially promising coronavirus vaccine driving investors to rotate out of tech stocks, driving stock ETFs to robust gains this week, exchange-traded funds appear poised for a robust finish to 2020. On Wednesday, the S&P 500 climbed 0.81% while the recently downcast Nasdaq improved 1.64%, with Big Tech names like Apple adding 1.9%, and [.

Could Record Inflows Be On the Horizon For ETFs?

After pulling back and trading mixed on Tuesday, as investors rotated out of tech stocks, the S&P 500, Nasdaq Composite, and related stock ETFs are showing modest gains in early Wednesday trading, as investors increased allocations in tech, taking advantage of stocks that were battered over the last couple of days. The S&P 500 climbed [.

Stock ETFs Gain as Investors Look For Beaten Down Tech Bargains

WisdomTree U.S. Total Dividend Fund

Global X Superdividend ETF

Three factors to help you choose income-generating positions for retirement, plus three funds that pay dividends monthly.

How Can I Invest for $1,000 in Monthly Retirement Dividends?

DIA is the best (and only) non-leveraged ETF tracking the Dow Jones Industrial Average for Q1 2021.

The Best (and Only) Dow Jones Industrial Average ETF for Q1 2021

Stocks and index ETFs are mixed to lower on Tuesday, as Big Tech gets hit by a market rotation from shares that thrived during the pandemic into stocks deemed to benefit from economic recovery, after ebullience over a potential vaccine on Monday. The S&P 500 lost 0.9% Tuesday, after notching fresh all-time highs on Monday, [.

Stock ETFs Trade Mixed As Investors Rotate Out Of Big Tech

Stock indexes and index ETFs underwent a historic surge Monday as investors sent stocks to record levels with major presidential and coronavirus vaccine headlines. Investors were elated over trial data from drugmakers Pfizer and BioNTech showing that their coronavirus vaccine is over 90% effective, and results in protection within 28 days of vaccination.

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