The Dow Jones is an index that is made up of 30 large, typically blue-chip companies on the NYSE and Nasdaq. It’s named after Charles Dow and Edward Jones. There are only 30 companies on this index, so you could choose to invest in all 30 or you could invest in an index fund that does it for you. Find out how to invest in the Dow Jones index and more about how the Dow Jones works.
The Dow Jones stock market index comprises the 30 most traded stocks on the New York Stock Exchange and the Nasdaq. It contains some major companies like Apple, Coca-Cola and McDonald’s. It’s a popular index to watch if you want to monitor the performance of leading blue-chip stocks in the US.
Yes, there are a couple of ways to trade or invest in the Dow Jones from the UK. While you can’t buy shares directly in the Dow Jones, you can invest in an exchange traded fund (ETF) or index fund that tracks the performance of the 30 stocks in the Dow Jones Industrial Average index. You can also buy shares in the individual companies listed on the Dow Jones index, though this can be an expensive and time-consuming way to invest.
The Dow Jones Industrial Average (DJIA), also known as the Dow, is a stock market index that tracks the stock performance of 30 of the largest companies on US stock exchanges. It’s not weighted by market capitalisation and does not use a weighted arithmetic mean. It is maintained by S&P Dow Jones Indices and is the second-oldest US market index.
The Dow is an index of 30 of the largest and most successful companies on US stock exchanges. Between 2009 and 2019, the Dow gained over 21,000 points, an increase of around 260%. Like most stock indexes, the Dow suffered heavy losses as a result of the coronavirus pandemic, but historically, it has been a sensible investment option.
Yes, there are a number of Dow Jones ETFs available for UK residents to invest in. Many ETFs track all 30 stocks in the Dow Jones index, though you may also find some that only track a selection, so check the key investor information document carefully to make sure you know what you’re getting. Below, we’ve listed some ETFs that are listed on the London Stock Exchange.
You can also invest in the Dow Jones by buying stocks in the listed companies directly. You could choose to buy an equal number of shares in each of the 30 companies in the Dow to closely replicate the Dow’s full performance. Alternatively, you could select a few stocks to buy.
However, while buying stocks gives you direct exposure to the companies in the Dow Jones, it’s likely to be an expensive way to invest. Many of the stocks in the Dow are worth hundreds of US dollars each. So, even if you only wanted to buy one stock per company, you’d be looking at investing significant money.
Depending on which broker or trading platform you use, you may also be charged for each individual stock you buy. These trading fees can often wipe out any potential profit you make. In comparison, you usually only pay a small annual fee when you buy an ETF, but your investment will still be tied to the performance of the Dow. Some platforms may also charge a small trading fee to invest in an ETF – but a single trading fee is likely to cost much less than fees for investing in 30 individual stocks. This is likely to make a fund a more affordable, and more straightforward, option for most investors.
| Company | Exchange | Stock code | Industry |
|---|---|---|---|
| 3M | NYSE | NYSE: MMM | Conglomerate |
| American Express | NYSE | NYSE: AXP | Financial services |
| Apple Inc. | NASDAQ | AAPL | Information technology |
| Boeing | NYSE | NYSE: BA | Aerospace and arms |
| Caterpillar Inc. | NYSE | NYSE: CAT | Construction/Mining |
| Chevron Corporation | NYSE | NYSE: CVX | Petroleum industry |
| Cisco Systems | NASDAQ | CSCO | Information technology |
| The Coca-Cola Company | NYSE | NYSE: KO | Food industry |
| Dow Inc. | NYSE | NYSE: DOW | Chemical industry |
| ExxonMobil | NYSE | NYSE: XOM | Petroleum industry |
| Goldman Sachs | NYSE | NYSE: GS | Financial services |
| The Home Depot | NYSE | NYSE: HD | Retailing |
| IBM | NYSE | NYSE: IBM | Information technology |
| Intel | NASDAQ | INTC | Information technology |
| Johnson & Johnson | NYSE | NYSE: JNJ | Pharmaceuticals |
| JPMorgan Chase | NYSE | NYSE: JPM | Financial services |
| McDonald’s | NYSE | NYSE: MCD | Food industry |
| Merck & Co. | NYSE | NYSE: MRK | Pharmaceuticals |
| Microsoft | NASDAQ | MSFT | Information technology |
| Nike | NYSE | NYSE: NKE | Apparel |
| Pfizer | NYSE | NYSE: PFE | Pharmaceuticals |
| Procter & Gamble | NYSE | NYSE: PG | Consumer |
| The Travelers Companies | NYSE | NYSE: TRV | Financial services |
| UnitedHealth Group | NYSE | NYSE: UNH | Managed health care |
| United Technologies | NYSE | NYSE: UTX | Conglomerate |
| Verizon | NYSE | NYSE: VZ | Telecommunication |
| Visa Inc. | NYSE | NYSE: V | Financial services |
| Walmart | NYSE | NYSE: WMT | Retailing |
| Walgreens Boots Alliance | NASDAQ | WBA | Retailing |
| The Walt Disney Company | NYSE | NYSE: DIS | Broadcasting/entertainment |
The Dow Jones isn’t typically regarded as a particularly innovative or fashionable index to invest in. You won’t find any young upstart companies among its ranks, so if you’re on the hunt for high-risk, high-reward investments, you probably won’t find it in the Dow Jones.
Instead, it’s made up of so-called “blue chip” stocks – typically big, well-established companies with a proven track record of solid performance (think the likes of Visa and Walmart). This could make a Dow Jones ETF a reasonable bet if you’re looking for an investment with relatively low volatility (though, of course, no investment is risk-free).
However, with only 30 companies listed, it’s not a terribly diverse index (especially when compared with the 500 stocks on the S&P 500, for example).
As such, there’s an argument that the Dow Jones shouldn’t be the only index featured in most investors’ portfolios. But a Dow Jones ETF could be worth considering as part of a balanced portfolio that includes a mix of investment types across different market sectors and regions.
The Dow Jones index is a little different to other indices, mainly because it’s only got a small number of stocks in it, of which most, if not all, are blue-chip stocks. This means that it’s not very diversified as smaller companies aren’t included. It’s worth looking at the Dow in comparison with other indices, like the S&P 500 to get a larger picture of the economy. For investors, the Dow is a good place to get exposure to large blue-chip companies.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
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