Exchange-traded fund (ETF) provider and asset manager First Trust Advisors has launched a new index-based ETF, the First Trust Dow 30 Equal Weight ETF.
The fund seeks investment results that correspond generally to the price and yield, before fees and expenses, of an equity index called the Dow Jones Industrial Average Equal Weight Index (the DJIA Equal Weight Index). The DJIA Equal Weight Index is an equal-weight version of the Dow Jones Industrial Average (DJIA).
“The Dow Jones Industrial Average has been an important barometer for blue-chip US stocks,” says Ryan Issakainen, CFA, Senior Vice President, Exchange-Traded Fund Strategist at First Trust. The DJIA is a price-weighted index, comprised of 30 well-known, mega-cap companies. In contrast, the DJIA Equal Weight Index gives the same weight to each of the 30 constituents, allowing all companies to contribute equally, regardless of their price, which we believe may significantly reduce stock specific risk relative to price weighting. “We believe that the equally weighted version of this index is a noteworthy enhancement for ETF investors, in comparison to the traditional price-weighted version of the index,” Issakainen says.
“We are excited to license the Dow Jones Industrial Average Equal Weight Index to First Trust Advisors,” says Joe Kairen, Senior Director, Strategy Indices at S&P Dow Jones Indices. “The equal-weighted design of the index allows for each of the 30 companies in the Dow Jones Industrial Average, an iconic indicator of investor sentiment for more than 120 years, to have the same effect on its performance.”