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DIA vs. PFF: What’s The Difference?

The SPDR Dow Jones Industrial Average ETF Trust (DIA) and the iShares Preferred and Income Securities ETF (PFF) are both among the Top 100 ETFs. DIA is a SPDR State Street Global Advisors Large Value fund and PFF is a iShares Preferred Stock fund. So, what’s the difference between DIA and PFF? And which fund is better?

The expense ratio of DIA is 0.30 percentage points lower than PFF’s (0.16% vs. 0.46%). DIA also has a higher exposure to the financial services sector and a higher standard deviation. Overall, DIA has provided higher returns than PFF over the past 11 years.

In this article, we’ll compare DIA vs. PFF. We’ll look at holdings and portfolio growth, as well as at their performance and industry exposure. Moreover, I’ll also discuss DIA’s and PFF’s annual returns, risk metrics, and fund composition and examine how these affect their overall returns.

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Summary

DIAPFF
NameSPDR Dow Jones Industrial Average ETF TrustiShares Preferred and Income Securities ETF
CategoryLarge ValuePreferred Stock
IssuerSPDR State Street Global AdvisorsiShares
AUM30.46B19.8B
Avg. Return13.35%6.90%
Div. Yield1.61%4.47%
Expense Ratio0.16%0.46%

The SPDR Dow Jones Industrial Average ETF Trust (DIA) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 30.46B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.61% with an expense ratio of 0.16%.

The iShares Preferred and Income Securities ETF (PFF) is a Preferred Stock fund that is issued by iShares. It currently has 19.8B total assets under management and has yielded an average annual return of 6.90% over the past 10 years. The fund has a dividend yield of 4.47% with an expense ratio of 0.46%.

DIA’s dividend yield is 2.86% lower than that of PFF (1.61% vs. 4.47%). Also, DIA yielded on average 6.46% more per year over the past decade (13.35% vs. 6.90%). The expense ratio of DIA is 0.30 percentage points lower than PFF’s (0.16% vs. 0.46%).

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Fund Composition

Industry Exposure

DIA vs. PFF - Industry Exposure

DIAPFF
Technology17.32%0.0%
Industrials16.7%10.27%
Energy2.0%0.0%
Communication Services4.42%0.0%
Utilities0.0%81.81%
Healthcare17.92%3.54%
Consumer Defensive6.3%0.0%
Real Estate0.0%0.65%
Financial Services20.68%0.0%
Consumer Cyclical13.44%0.0%
Basic Materials1.21%3.74%

The SPDR Dow Jones Industrial Average ETF Trust (DIA) has the most exposure to the Financial Services sector at 20.68%. This is followed by Healthcare and Technology at 17.92% and 17.32% respectively. Utilities (0.0%), Basic Materials (1.21%), and Energy (2.0%) only make up 3.21% of the fund’s total assets.

DIA’s mid-section with moderate exposure is comprised of Communication Services, Consumer Defensive, Consumer Cyclical, Industrials, and Technology stocks at 4.42%, 6.3%, 13.44%, 16.7%, and 17.32%.

The iShares Preferred and Income Securities ETF (PFF) has the most exposure to the Utilities sector at 81.81%. This is followed by Industrials and Basic Materials at 10.27% and 3.74% respectively. Financial Services (0.0%), Consumer Defensive (0.0%), and Communication Services (0.0%) only make up 0.00% of the fund’s total assets.

PFF’s mid-section with moderate exposure is comprised of Energy, Technology, Real Estate, Healthcare, and Basic Materials stocks at 0.0%, 0.0%, 0.65%, 3.54%, and 3.74%.

DIA is 20.68% more exposed to the Financial Services sector than PFF (20.68% vs 0.0%). DIA’s exposure to Healthcare and Technology stocks is 14.38% higher and 17.32% higher respectively (17.92% vs. 3.54% and 17.32% vs. 0.0%). In total, Utilities, Basic Materials, and Energy also make up 82.34% less of the fund’s holdings compared to PFF (3.21% vs. 85.55%).

Holdings

DIA - Holdings

DIA HoldingsWeight
UnitedHealth Group Inc7.63%
Goldman Sachs Group Inc7.23%
The Home Depot Inc6.07%
Microsoft Corp5.16%
Salesforce.com Inc4.65%
Amgen Inc4.64%
Boeing Co4.56%
Visa Inc Class A4.45%
McDonald’s Corp4.4%
Honeywell International Inc4.18%

DIA’s Top Holdings are UnitedHealth Group Inc, Goldman Sachs Group Inc, The Home Depot Inc, Microsoft Corp, and Salesforce.com Inc at 7.63%, 7.23%, 6.07%, 5.16%, and 4.65%.

Amgen Inc (4.64%), Boeing Co (4.56%), and Visa Inc Class A (4.45%) have a slightly smaller but still significant weight. McDonald’s Corp and Honeywell International Inc are also represented in the DIA’s holdings at 4.4% and 4.18%.

PFF - Holdings

PFF HoldingsWeight
Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A2.54%
BlackRock Cash Funds Treasury SL Agency2.3%
Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-1.79%
Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-1.49%
ArcelorMittal S.A. 5.5%1.36%
Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A1.35%
Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B1.14%
NextEra Energy Inc Unit1.12%
Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.41.08%
Avantor Inc Ser A0.99%

PFF’s Top Holdings are Broadcom Inc Broadcom Inc 8 % Mandatory Convertible Preferred Stock Ser A, BlackRock Cash Funds Treasury SL Agency, Wells Fargo & Co 7 1/2 % Non Cum Perp Conv Pfd Shs -A- Series -L-, Bank of America Corp 7 1/4 % Non-Cum Perp Conv Pfd Shs Series -L-, and ArcelorMittal S.A. 5.5% at 2.54%, 2.3%, 1.79%, 1.49%, and 1.36%.

Danaher Corp PRF CONVERT 15/04/2022 USD – Ser A (1.35%), Danaher Corp 5% PRF PERPETUAL USD 1000 – Ser B (1.14%), and NextEra Energy Inc Unit (1.12%) have a slightly smaller but still significant weight. Citigroup Capital XIII Floating Rate Trust Pfd Secs Registered 2010-30.10.4 and Avantor Inc Ser A are also represented in the PFF’s holdings at 1.08% and 0.99%.

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Risk Analysis

DIAPFF
Mean Return1.130.52
R-squared93.319.39
Std. Deviation13.687.87
Alpha-0.943.45
Beta0.970.81
Sharpe Ratio0.940.72
Treynor Ratio13.076.79

The SPDR Dow Jones Industrial Average ETF Trust (DIA) has a R-squared of 93.31 with a Sharpe Ratio of 0.94 and a Mean Return of 1.13. Its Alpha is -0.94 while DIA’s Standard Deviation is 13.68. Furthermore, the fund has a Beta of 0.97 and a Treynor Ratio of 13.07.

The iShares Preferred and Income Securities ETF (PFF) has a Sharpe Ratio of 0.72 with a Mean Return of 0.52 and a R-squared of 9.39. Its Treynor Ratio is 6.79 while PFF’s Alpha is 3.45. Furthermore, the fund has a Beta of 0.81 and a Standard Deviation of 7.87.

DIA’s Mean Return is 0.61 points higher than that of PFF and its R-squared is 83.92 points higher. With a Standard Deviation of 13.68, DIA is slightly more volatile than PFF. The Alpha and Beta of DIA are 4.39 points lower and 0.16 points higher than PFF’s Alpha and Beta.

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Performance

Annual Returns

DIA vs. PFF - Annual Returns

YearDIAPFF
20209.63%7.94%
201925.09%15.62%
2018-3.6%-4.77%
201727.97%8.33%
201616.28%1.26%
20150.1%4.62%
20149.88%13.45%
201329.41%-0.59%
201210.04%18.25%
20118.21%-2.2%
201013.87%13.96%

DIA had its best year in 2013 with an annual return of 29.41%. DIA’s worst year over the past decade yielded -3.6% and occurred in 2018. In most years the SPDR Dow Jones Industrial Average ETF Trust provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 9.88%, 10.04%, and 13.87% respectively.

The year 2012 was the strongest year for PFF, returning 18.25% on an annual basis. The poorest year for PFF in the last ten years was 2018, with a yield of -4.77%. Most years the iShares Preferred and Income Securities ETF has given investors modest returns, such as in 2015, 2020, and 2017, when gains were 4.62%, 7.94%, and 8.33% respectively.

Portfolio Growth

DIA vs. PFF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
DIA$10,000$37,96513.35%
PFF$10,000$20,2726.90%

A $10,000 investment in DIA would have resulted in a final balance of $37,965. This is a profit of $27,965 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.35%.

With a $10,000 investment in PFF, the end total would have been $20,272. This equates to a $10,272 profit over 11 years and a compound annual growth rate (CAGR) of 6.90%.

DIA’s CAGR is 6.46 percentage points higher than that of PFF and as a result, would have yielded $17,693 more on a $10,000 investment. Thus, DIA outperformed PFF by 6.46% annually.


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