Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the SPDR Dow Jones Industrial Average ETF (DIA – Free Report) is a passively managed exchange traded fund launched on 01/13/1998.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $27.25 billion, making it one of the largest ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.16%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 1.95%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Healthcare sector–about 21.90% of the portfolio. Information Technology and Financials round out the top three.
Looking at individual holdings, Unitedhealth Group Incorporated (UNH – Free Report) accounts for about 10.60% of total assets, followed by Goldman Sachs Group Inc. (GS – Free Report) and Home Depot Inc. (HD – Free Report) .
The top 10 holdings account for about 54.49% of total assets under management.
Performance and Risk
DIA seeks to match the performance of the Dow Jones Industrial Average before fees and expenses. The Dow Jones …….