The Dow Jones Industrial Average, also known as the Dow Jones, DJ30 or DJIA, is the flagship index of the New York Stock Exchange in the United States and thus reflects American economic activity. It is calculated from 30 of the most highly capitalised US listed companies, which is why it contains some of the most liquid stocks in the world. On this page, we will look at the composition of this stock market index with a list of the companies that are currently included in it and how they are selected.
The Dow Jones currently includes 30 of the world's largest market capitalisations. But it is important to know that the composition of the index has changed significantly since it was first listed. For example, the Dow Jones was first listed with only 12 companies, of which only one remains in the index today. This is the company General Electric, formerly known as Edison. This company entered the index in November 1907 and has never left it since.
The current composition of the Dow Jone Industrial Average is as follows:
Of course, the companies that make up this precious American stock market index are not chosen at random. One might think that it is only quantitative criteria such as the total market capitalisation of these companies, but it seems that the selection criteria are more complex.
The way in which the issuer of this index selects the stocks that will be included in the Dow Jones is not made public, but the issuer indicates that its criteria are multiple. In particular, it is known that it is essential that the listed company is based in the United States, has a good reputation and is experiencing strong growth.
The index selection committee is in charge of these choices. It is composed of three representatives of the S&P Dow Jones and two representatives of the Wall Street Journal. Meetings of this committee are held only when the composition of the index needs to be revised and not on a regular basis.
Another important criterion taken into account by the committee is that the company with the most expensive shares should not weigh more than ten times the company with the least expensive shares.
Indeed, it should be remembered that the primary objective of the Dow Jones index is to be representative of the US economy. It is in this concern for balance that some companies leave the index and are replaced by others.
The diversification of the Dow Jones index is particularly sought after in the choice of the companies that make it up. Technology stocks are therefore slightly more represented than others.
Here is the breakdown of the composition of the Dow Jones index according to sectors of activity:
Of course, it is possible to invest in each of the stocks that make up the Dow Jones index through various means, including
As these US stocks are among the most liquid in the world market, it is quite easy to find a broker who offers them.
But the Dow Jones is also a global benchmark and it is therefore possible to invest in its entire composition with ETFs, which are contracts that replicate its composition and performance. Remember that an ETF is an index fund listed on the stock exchange whose purpose is to track and replicate a stock market index.
It is also possible to trade on the Dow Jones index through derivatives such as CFDs or contracts for difference, without using an ETF. CFDs allow you to speculate on the rise or fall of the Dow Jones index without buying the stocks that make up the index. However, they are only suitable for the most experienced investors because of the risk involved, particularly in the use of leverage.
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