2024-03-29 15:38:00 ET
The arguments for simply buying and holding a basket of blue chip stocks like those in the Dow Jones Industrial Average (DJINDICES: ^DJI) are solid to be sure. This group of stocks is inherently well diversified, for instance, in addition to being market stalwarts. Standard & Poor's also regularly updates the Dow's 30 stocks. Perhaps best of all, a long-term investment in an instrument like the SPDR Dow Jones Industrial Average ETF Trust (NYSEMKT: DIA) is simple, and it doesn't require any real maintenance or monitoring.
If you'd like to beat the Dow's long-term performance, however, there's another equally simple exchange-traded fund (or ETF ) that's up for the job. And, it's probably not the one you think.
There was a time when the Dow Jones Industrial Average was the only meaningful market barometer. Even after the S&P 500 index (SNPINDEX: ^GSPC) was created in its current form back in 1957, however, the Dow remained an important indicator of the overall market's health; it's only been in the modern era that the Dow began lagging the S&P 500's performance, mostly because it holds relatively fewer growth stocks. Well, that, and the fact that the cap-weighted S&P 500 is now overwhelmingly dominated by some of the market's fastest-growing companies (and their fastest-rising stocks) like Microsoft , Apple , Nvidia , Alphabet , and Amazon . These five names alone account for nearly one-fourth of the S&P 500's value! The same is true of the SPDR S&P 500 ETF Trust (NYSEMKT: SPY) , which is the go-to option for most investors who just want to plug into the broad market's overall performance.
For further details see:
You Can Do Better Than the Dow Jones. Buy This ETF Instead.