Dow Jones Utilities Average - DJUA

Overview
The Dow Jones Utilities Average (DJUA) is the most widely cited utilities index in the U.S. Started in January 1929, it is also the third oldest of the Dow Jones Averages.

Composition

The Dow Jones Utilities Average is comprised of fifteen of the largest utilities companies in the United States. This index, like most other Dow Jones Averages, is price weighted. This means that firms with the highest stock prices will have the greatest impact on the index's value (regardless of the underlying company's actual size).

The table below lists the components of the Dow Jones Utilities Average along with the weighting that each stock carries in the index (data as of August 2004):

Positives
No other utility index is as widely followed as the Dow Jones Utilities Average. This index includes virtually all of the nation's leading utility firms.

Drawbacks
Many investors believe that a price-weighted index can distort the actual returns posted by a sector because the firms with the largest market value usually don't have the largest impact on the index’s value. Like its close cousin, the Dow Jones Transportation Average, the Utilities Average has become less cited over the years as investors have shifted their attention toward technology and service stocks.

How can I trade/invest in this index?
You can invest in the Dow Jones Utilities Average through either options, futures, or a variety of different funds. However, our recommended investment vehicle is the iShares Dow Jones U.S. Utilities Fund (IDU). This exchange-traded fund (ETF) almost perfectly tracks the Utilities Average, sports a low 0.6% expense ratio, and can be easily traded during market hours just like a common stock.

Additional Information