This article was updated March 13, 2017 and originally published July 12, 2016.

Built to track 30 blue chip stocks, the Dow Jones Industrial Average is often referenced as a barometer for the performance of the stock market in newspapers and on cable news. These two Dow Jones ETFs track the performance of the Dow and carry low expense ratios, making them suitable for buy-and-hold investors.

Dow Jones Industrial Average ETF


Expense ratio

SPDR Dow Jones Industrial Average ETF



Guggenheim Dow Jones Industrial Average Dividend ETF



Data source: State Street Global Advisors, Guggenheim.

A true Dow Jones ETF with a monthly bonus

The biggest and most popular Dow Jones tracker, the SPDR Dow Jones Industrial Average ETF (NYSEMKT:DIA), has done an excellent job tracking the performance of the Dow since it was launched in 1998. The fund also carries a low annual expense ratio of just 0.17% of assets, making it inexpensive to buy and hold.

Because the Dow is generally made up of investments in 30 mature companies, its components typically pay larger dividends than the average stock. Conveniently, this ETF distributes dividends to its investors monthly, in contrast to many funds which generally distribute dividends on a quarterly basis.

Despite some inherent difficulties in tracking an average, the fund has historically delivered on its promise to track the Dow. Over the most recent 10-year period, the fund deviated from the performance of the Dow by only 0.17% annually, due to its 0.17% annual expense ratio.

A modified Dow Jones ETF for higher dividend yields

Looking for higher yields? The Guggenheim Dow Jones Industrial Average Dividend ETF (NYSEMKT:DJD) offers a different twist on tracking the Dow by weighting its investments by their dividend yields. The result is a fund that should reward investors with bigger dividend distributions than traditional Dow Jones trackers. The fund's yield of 2.36% tops the SPDR ETF's 2.17% yield, despite a higher expense ratio.

Because the fund is relatively new, it has a limited performance history. But it's almost certain that its performance will differ meaningfully from the performance of the Dow at any given time. Note that although both funds own the same 30 stocks, their top 5 holdings share only two of the same stocks. The differences in weighting can create a very different outcome for investors.

Top 5 Holdings for DIA

Top 5 Holdings for DJD

Goldman Sachs


3M Company






UnitedHealth Group


Data source: SPDR and Guggenheim Investments.

The ETF's yield would be higher if not for a costlier expense ratio of 0.30% of assets annually, making it nearly twice as expense as the SPDR Dow Jones Industrial Average ETF. Fortunately, every Dow component currently pays a dividend, so this fund doesn't sacrifice any Dow stocks in the pursuit of higher dividend yields. 

Picture of blocks that spell out "ETF."

S&P 500 ETFs are almost universally more diversified and less expensive than a Dow Jones ETF. Image source: Getty Images.

Should you buy the DJIA?

The Dow Jones Industrial Average is a relatively old creation, first calculated in 1896. It is a price-weighted average, meaning that its performance is most heavily affected by the companies with the highest per-share stock prices.

The Average's weighting mechanism creates some odd situations. For example, a stock split has an effect on a company's weighting in the Dow, even though it has no impact to a company's market value or its return for investors. Modern indexes like the S&P 500 Index and the Total Stock Market Index are weighted by a company's market capitalization rather than share price.

Similarly, because the DJIA is controlled by committee, it lacks clear rules for which stocks are added and removed. S&P Dow Jones Indices notes on its website: "While there are no rules for component selection, a stock typically is added only if it has an excellent reputation, demonstrates sustained growth, is of interest to a large number of investors and accurately represents the sector(s) covered by the average."

Annualized Returns by Fund and Period

SPDR Dow Jones Industrial Average ETF

Vanguard 500 Index Admiral Shares 

5 years



10 years



15 years



Data source: Morningstar.

Alas, a company's reputation and interest among a large number of investors says nothing about its ability to generate excellent returns for investors. Furthermore, because it includes only 30 stocks, it is not a broadly diversified index like the S&P 500 or Total Stock Market Index.

The Dow Jones Industrial Average has performed roughly in line with other large-cap stock index ETFs, narrowly beating out a popular S&P 500 fund over a 15-year period but lagging in the most recent five- and 10-year periods.

Investors who aren't afraid of the Dow's limited diversification may prefer to hold it for its higher yielding components, though a more diversified ETF may be a better choice for hands-off investors.

Jordan Wathen has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Verizon Communications. The Motley Fool recommends Chevron and UnitedHealth Group. The Motley Fool has a disclosure policy.