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Dow Jones Logs Best Month Since 1976: ETFs to Bet On
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The Dow Jones Industrial Average wrapped up its best month since 1976, surging about 14% in October. Notably, the blue-chip index has significant exposure to cyclical sectors like energy and industrials, which were the biggest winners in October.
Investors seeking to participate in the Dow Jones’ rally can consider SPDR Dow Jones Industrial Average ETF (DIA - Free Report) , iShares Dow Jones U.S. ETF (IYY - Free Report) , Invesco Dow Jones Industrial Average Dividend ETF (DJD - Free Report) , ProShares Ultra Dow30 ETF (DDM - Free Report) and ProShares UltraPro Dow30 (UDOW - Free Report) .
The monthly gains were driven by the hopes that the Fed could soon moderate its aggressive tightening stance in light of weakening economic data. According to CME Group, traders have become more confident the Fed will reduce its rate hike plans from three-quarters to half a percentage point at its December meeting. Many on Wall Street are expecting that the Fed could pause its hikes or reduce its rate hike size in the near future. Additionally, investors are betting that traditional stocks like banks will lead the next bull market (read: 4 ETF Areas Up At Least 10% Last Week).
The rally came despite the disappointment from large tech companies such as Meta Platforms (META - Free Report) and Amazon (AMZN - Free Report) .
ETFs to Bet
SPDR Dow Jones Industrial Average ETF (DIA - Free Report)
SPDR Dow Jones Industrial Average ETF is one of the largest and most popular ETFs in the large-cap space, with AUM of $28.5 billion and an average daily volume of 3.7 million shares. Holding 30 blue-chip stocks, the fund is widely spread across components, with each having less than 11.1% share. Healthcare (22.1%), information technology (19.6%), financials (16%), industrials (13.9%), and consumer discretionary (13.4%) are the top five sectors.
SPDR Dow Jones Industrial Average ETF charges 16 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk.
iShares Dow Jones U.S. ETF tracks the Dow Jones U.S. Index, holding 1096 stocks in its basket, with none accounting for more than 6.4% of assets. Information technology takes the largest share at 25.9%, while healthcare, financials and consumer discretionary round off the next spots with double-digit exposure each (read: Dow Jones Reclaims 34,000: ETFs to Ride On).
iShares Dow Jones U.S. ETF has amassed $1.5 million in its asset base while trading in an average daily volume of 55,000 shares. It charges 20 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Invesco Dow Jones Industrial Average Dividend ETF (DJD - Free Report)
Invesco Dow Jones Industrial Average Dividend ETF offers exposure to dividend-paying companies included in the Dow Jones Industrial Average by their 12-month dividend yield over the prior 12 months. It holds 28 stocks in its basket, with none accounting for more than 6.8% of assets.
Invesco Dow Jones Industrial Average Dividend ETF has been able to manage assets worth $245 million, while trading in a volume of 39,000 shares a day on average. It charges 7 bps in annual fees and has a Zacks ETF Rank #3.
Leveraged Play: A Short-Term Win
Investors willing to take an extra risk could go for leveraged ETFs. These funds create a leveraged (2X or 3X) long position in the underlying index through the use of swaps, options, future contracts and other financial instruments. While these funds provide outsized returns in a short span, they could lead to huge losses compared to traditional funds in fluctuating or seesaw markets.
ProShares Ultra Dow30 ETF provides twice (2X) the return of the Dow Jones Industrial Average. It has AUM of $334.8 million and trades in a good volume of around 488,000 shares on average. The product charges 95 bps in annual fees (see: all the Leveraged Equity ETFs here).
ProShares UltraPro Dow30 also tracks the Dow Jones Industrial Average but offers three times (3X) exposure to the index. It has amassed $615.5 million in its asset base and trades in a solid average daily volume of 3.5 million shares. The expense ratio comes in at 0.95%.
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Dow Jones Logs Best Month Since 1976: ETFs to Bet On
The Dow Jones Industrial Average wrapped up its best month since 1976, surging about 14% in October. Notably, the blue-chip index has significant exposure to cyclical sectors like energy and industrials, which were the biggest winners in October.
Investors seeking to participate in the Dow Jones’ rally can consider SPDR Dow Jones Industrial Average ETF (DIA - Free Report) , iShares Dow Jones U.S. ETF (IYY - Free Report) , Invesco Dow Jones Industrial Average Dividend ETF (DJD - Free Report) , ProShares Ultra Dow30 ETF (DDM - Free Report) and ProShares UltraPro Dow30 (UDOW - Free Report) .
The monthly gains were driven by the hopes that the Fed could soon moderate its aggressive tightening stance in light of weakening economic data. According to CME Group, traders have become more confident the Fed will reduce its rate hike plans from three-quarters to half a percentage point at its December meeting. Many on Wall Street are expecting that the Fed could pause its hikes or reduce its rate hike size in the near future. Additionally, investors are betting that traditional stocks like banks will lead the next bull market (read: 4 ETF Areas Up At Least 10% Last Week).
The rally came despite the disappointment from large tech companies such as Meta Platforms (META - Free Report) and Amazon (AMZN - Free Report) .
ETFs to Bet
SPDR Dow Jones Industrial Average ETF (DIA - Free Report)
SPDR Dow Jones Industrial Average ETF is one of the largest and most popular ETFs in the large-cap space, with AUM of $28.5 billion and an average daily volume of 3.7 million shares. Holding 30 blue-chip stocks, the fund is widely spread across components, with each having less than 11.1% share. Healthcare (22.1%), information technology (19.6%), financials (16%), industrials (13.9%), and consumer discretionary (13.4%) are the top five sectors.
SPDR Dow Jones Industrial Average ETF charges 16 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk.
iShares Dow Jones U.S. ETF (IYY - Free Report)
iShares Dow Jones U.S. ETF tracks the Dow Jones U.S. Index, holding 1096 stocks in its basket, with none accounting for more than 6.4% of assets. Information technology takes the largest share at 25.9%, while healthcare, financials and consumer discretionary round off the next spots with double-digit exposure each (read: Dow Jones Reclaims 34,000: ETFs to Ride On).
iShares Dow Jones U.S. ETF has amassed $1.5 million in its asset base while trading in an average daily volume of 55,000 shares. It charges 20 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Invesco Dow Jones Industrial Average Dividend ETF (DJD - Free Report)
Invesco Dow Jones Industrial Average Dividend ETF offers exposure to dividend-paying companies included in the Dow Jones Industrial Average by their 12-month dividend yield over the prior 12 months. It holds 28 stocks in its basket, with none accounting for more than 6.8% of assets.
Invesco Dow Jones Industrial Average Dividend ETF has been able to manage assets worth $245 million, while trading in a volume of 39,000 shares a day on average. It charges 7 bps in annual fees and has a Zacks ETF Rank #3.
Leveraged Play: A Short-Term Win
Investors willing to take an extra risk could go for leveraged ETFs. These funds create a leveraged (2X or 3X) long position in the underlying index through the use of swaps, options, future contracts and other financial instruments. While these funds provide outsized returns in a short span, they could lead to huge losses compared to traditional funds in fluctuating or seesaw markets.
ProShares Ultra Dow30 ETF (DDM - Free Report)
ProShares Ultra Dow30 ETF provides twice (2X) the return of the Dow Jones Industrial Average. It has AUM of $334.8 million and trades in a good volume of around 488,000 shares on average. The product charges 95 bps in annual fees (see: all the Leveraged Equity ETFs here).
ProShares UltraPro Dow30 (UDOW - Free Report)
ProShares UltraPro Dow30 also tracks the Dow Jones Industrial Average but offers three times (3X) exposure to the index. It has amassed $615.5 million in its asset base and trades in a solid average daily volume of 3.5 million shares. The expense ratio comes in at 0.95%.