What are diamonds?
Diamonds is an informal term for a publicly traded index fund (ETF) known as the SPDR Dow Jones Industrial Average ETF. The Diamonds ETF is traded on the NYSE Arca stock exchange under the symbol DIA. The ETF’s objective is to provide returns that reflect the price and performance of the Dow Jones Industrial Average (DJIA). Diamonds are also an extremely hard gemstone used primarily for jewelry, tools and as an investment in precious stones.
Launched in 1998, the publicly traded Dow Diamonds fund is managed by State Street Global Advisors. Since its launch, it has become popular with investors as a means of obtaining roughly the same returns as owning individual stocks in the underlying Dow Jones Industrial Average. Investors can buy and sell ETF shares, just like common stocks. The fund’s assets are made up of 30 DJIA securities, in the same proportion weighted according to the price they appear in the DJIA, as well as a few cash assets.
The popularity of ETF Diamonds
Diamonds are a popular and generally well regarded fund. Holding Diamonds shares allows investors to reach the diversity of the DJIA with relatively low transaction costs. The fund is highly valued for its relatively low gross expense ratio, which was 0.17% in the first quarter of 2020. Diamonds, like other ETFs, can offer certain investors tax advantages over holding funds. investment funds. The large size of the fund provides sufficient liquidity for stocks, and investors can buy or sell stocks at any time the trade is open. The high market capitalization and liquidity of the ETF have spawned a variety of option chains from which traders can choose. The NYSE allows investors to trade Diamond stocks using a margin, as well as short sell Diamond stocks.
ETF Diamonds Statistics
As of April 30, 2020, the fund had total net assets of more than $ 21.3 billion, with approximately 85 million shares outstanding. The weighted average market capitalization of the fund was approximately $ 238 billion, at a price / earnings ratio of approximately 23.64. Since inception, the fund has returned investors an annualized return of approximately 8.08%.
Diamond Gemstones as an investment
Diamonds as gemstones are generally considered a bad investment vehicle, mainly due to the illiquidity of the market, lack of price transparency, high transaction costs and the high risk associated with quality assurance . Investors wishing to be exposed to diamonds could reduce some of the risks by owning GEMS, an ETF that invests in the diamond and precious stones industry. Many wealthy individuals see diamonds as a good investment because they can buy high-priced stones with relatively low transaction costs, and they can profit from diamonds as their value increases, as with antiques or art.