With investors favoring large- and mega-cap stocks and lower volatility names this year, revisiting a pair of exchange traded funds that track the venerable Dow Jones Industrial Average could be a rewarding strategy.
Those ETFs include the SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA), which tracks the Dow Jones Industrial Average, and the Guggenheim Dow Jones Industrial Average Dividend ETF (NYSEArca: DJD), which weighs the 30 Dow stocks by yield. As we head toward the third quarter and the start of the earnings season, a strengthening U.S. dollar could weigh on S&P 500 and large-cap exchange traded funds that have exposure to multi-national companies with a global footprint.
As we look to the second half of the year, investors should be concerned about the impact of a stronger U.S. dollar and of lower global economic growth on the sales and earnings for S&P 500 companies.
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DJD provides an alternative, strategic beta approach to the DJIA by weighting each security by dividend yield, instead of price. By comparison, DIA weights components based on the stock price.[related_stories]
“It’s a common investor perception that larger companies will be more resilient to bear markets than smaller companies. This idea stems from the perception that larger companies are consistently profitable, maintain a healthy balance sheet and generate massive cash flow, all of which should allow them to weather any market storm better than smaller companies,” according to Investopedia.