How to invest in the Dow Jones
Here's what you need to know about trading or investing in this US stock index
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What's in this guide?
- Can I invest in the Dow Jones in Australia?
- How to trade the Dow Jones index
- How to invest in a Dow Jones fund
- How does the Dow Jones work?
- Dow Jones ETFs
- Investing in Dow Jones stocks
- Dow Jones (DJIA) live price
- What companies are in the Dow Jones (DJIA)?
- Compare platforms for trading the Dow Jones
Can I invest in the Dow Jones in Australia?
Yes, there are a few ways to trade or invest in the Dow Jones from Australia. You can't buy shares directly in the Dow Jones because it's not a stock, but 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, but this can be an expensive and time-consuming way to invest. To buy shares in US-listed stocks from Australia, you'll need to open an account with a US stock trading platform.
How to trade the Dow Jones index
It's possible to trade the Dow Jones using contracts for difference (CFDs). When you trade CFD indices, you're betting on the future price movements of the index. This means you have the potential to earn a profit regardless of whether the index is rising or falling. This is sometimes called "futures" trading.
As CFD traders typically use leverage, both profits and losses are amplified. For this reason, CFDs are considered to be high-risk and only for experienced investors. You can find out more about this in our comprehensive guide to CFD trading.
How to invest in a Dow Jones fund
- Choose an index fund or ETF that tracks the Dow. Some index funds track the performance of all 30 Dow stocks, whereas others only track a certain number of stocks or are weighted more towards specific stocks. You should select the fund that best suits your investment goals.
- Open a share-trading account. Once you've selected the fund you'd like to buy, you'll need to open a trading account with a broker or platform that offers it. Different brokers have different fee structures, so it's worth researching which platform best suits your needs before investing. You can compare trading platforms below.
- Deposit funds. Once you've set up an account, you'll need to deposit funds. Depending on which broker you use, you may need to pay a forex fee when you deposit money.
- Buy the index fund. Once your account is set up and funded, you can buy the Dow Jones index fund. You generally pay a small annual fee in order to invest in an index fund or ETF.
How does the Dow Jones work?
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.
Should I invest in the Dow Jones?
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%. Historically it has been a sensible investment option, however in recent years it has been outperformed by the tech-heavy NASDAQ index.
Dow Jones ETFs
To date, there are no Dow Jones ETFs listed in Australia, however there are a number of ETFs that track the US market. Below are just a few:
- BetaShares S&P 500 Yield Maximiser Fund (Managed Fund)
- BetaShares NASDAQ 100 ETF - Currency Hedged
- iShares S&P 500 ETF
- BetaShares NASDAQ 100 ETF
Investing in Dow Jones stocks
The alternative way to invest in the Dow Jones is to buy stocks in the listed companies directly. You could choose to buy one share in each of the 30 companies in the Dow or select a few stocks to buy.
However, while this method 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, so if you wanted to buy at least one stock in each 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, and these trading fees can often wipe out any potential profit you make. In comparison, you only pay a small annual fee when you buy an ETF, but your investment will still be tied to the performance of the Dow.
You can also trade the Dow Jones via derivatives such as futures contracts, which let you predict how the index will perform over a certain period.
Dow Jones (DJIA) live price
What companies are in the Dow Jones (DJIA)?
|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|
|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|
|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|
|Visa Inc.||NYSE||NYSE: V||Financial services|
|Walgreens Boots Alliance||NASDAQ||WBA||Retailing|
|The Walt Disney Company||NYSE||NYSE: DIS||Broadcasting/entertainment|
Compare platforms for trading the Dow Jones
Important: Share trading can be financially risky and the value of your investment can go down as well as up. “Standard brokerage” fee is the cost to trade $1,000 or less of ASX-listed shares and ETFs without any qualifications or special eligibility. If ASX shares aren’t available, the fee shown is for US shares. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
Trading CFDs and forex on leverage is high-risk and you could lose more than your initial investment. It may not be suitable for every investor. Refer to the provider’s PDS and consider the risks before trading.
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