Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Dow Jones Utilities Average (DJUA)

What it is:

The Dow Jones Utilities Average (DJUA) is the most widely cited utilities index in the United States and the most widely recognized gauge of the utilities sector.

How it works (Example):

The Dow Jones Utilities Average is comprised of fifteen of the largest utilities companies in the U.S. 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 its value (regardless of the underlying company's actual size).

Why it Matters:

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.

Despite DJUA's wide usage, 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.