Dow ETF Products

The Dow Jones Industrial Average commonly referred to as "The Dow" is one of the oldest measures of stock market performance and was created by Charles Dow. Today most investors and professionals use the S&P 500 as the benchmark index but if you take a look the Dow ETF - DIA has actually outperformed the S&P 500 ETF - SPY since inception.

DIA - SPDR Dow Jones Industrial Average ETF is designed to track the movements of the Dow Jones Industrial Average less fees. It has been doing a great job of mirroring the index since it first started trading on 1/13/1998.

Gross Annual Expense Ratio = .18% (18 Basis Points)

As of 10/5/2010 the average daily volume was over 7.7 million which is a very active ETF but not close to the over 200 million shares of SPY traded on average. DIA had a dividend yield of 2.76%

As you can see DIA - Dow ETF has out-performed SPY by about 20 basis points since inception.

Performance Of DIA Since Inception VS. SPY (S&P 500 ETF)

Chart begins on the first trading day of DIA - 1/13/1998

Double Dow ETF - Long

DDM - ProShares Ultra Dow 30 seeks to deliver 200% of the daily performance of the DJIA index before fees and expenses. This is done through the applying addtional leverage using financial derivatives in addition to holding the Dow 30 components. This fund is for those who are looking for 2x leverage to the performance of the dow.

Annual Expense Ratio = .95% (95 Basis Points)

DDM began trading 6/19/2006 and as of 10/05/2010 the net assets were $314 million with an average daily trading volume of 1,944,180 shares per day.

As you can see by the chart below the performance of DDM since inception has lagged DIA ever since the sharp slide in 2008-2009. This underperformance is due to the way double etf products are geared toward daily performance and reset each night after the close.

DDM Performance Since Inception VS DIA

Chart begins on first trading day of DDM 6/19/2006

DDM is designed to be a short term trading vehicle not a long term investment. If you had purchased DDM 3 months ago and held it until today (10/05/2010) you can see the results would've been spectacular vs DIA. Up nearly 3x as much during the same time period.

Chart is from 7/05/2010 to 10/05/2010

Short Dow ETF (Inverse)

DOG - ProShares Short Dow 30 seeks to provide the inverse of the daily performance of the Dow Jones Industrial Average before fees. This is an inverse fund and is not leveraged.

Annual Expense Ratio = .90% (90 Basis Points)

As of 10/05/2010 net assets were $319 million and average daily trading volume was 509,495 shares.

As you can see in the following performance chart, DOG performed well during the severe decline in late 2008 and early 2009. However, today even though the DIA is still down a couple % over the timeframe the inverse did not make money (in theory it would be up 4%) but due to the way the daily price calculations work it's actually down almost 30% over the time frame.

Performance of DOG Since Inception VS DIA

Chart begins the first trading day for DOG 6/19/2006

Double Short Dow ETF

DXD - ProShares UltraShort Dow 30 is similar to DOG but is designed to provide -200% correlation to the daily performance of the Dow minus fees.  In other words if the DJIA drops 2% in a given day, then DXD should rise 4% on that day.  DXD began trading July 11, 2006 and trades 10 times the volume of DOG.

Annual Expense Ratio = .95% (95 Basis Points)

As of 10/05/2010 net assets were $522 million and average daily trading volume was just over 5 million shares.

As with other leveraged ETF products you can see that DXD is down nearly 70% since it's introduction despite being up as much as 50% in 2008.  Again, these leveraged etf products are designed to be trading vehicles and not long term investments.  Notice that even though the DIA is down just a few percentage points over the 4 year time frame both DDM (Double Long ETF) and DXD (Double Short ETF) are down dramatically.

Timing is EVERYTHING when trading Leveraged ETFs.

DXD Performance Since Inception VS DIA and DDM

Chart begins 7/11/2006 first trading day of DXD

 DIA  |  DDM  |  DOG  |  DXD