Apple’s addition to the Dow has taken the index’s weight to the technology sector to 17%, trailing only industrials at 20.1%. However, the Dow is still underweight technology by almost 270 basis points relative to the S&P 500. DIA’s weight to industrials is nearly double that of the SPDR S&P 500 ETF (NYSEArca: SPY), an ETF that features Apple as its largest holding.
Still, DIA has some drawbacks compared to a broad market ETF like SPY. The price-weighting methodology “and selection of securities by committee, also means DIA offers far less predictable returns than cap-weighted, rules-based indexes,” said Philip Blancato, CEO of Ladenburg Thalmann Asset Management in an interview with Aparna Narayanan of Investor’s Business Daily.
SPDR Dow Jones Industrial Average ETF
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of Apple and SPY.