UK Accounting Glossary
DIAMONDS are Exchange-Traded Funds (ETFs) trading on the American Stock Exchange (AMEX). DIAMONDS represent units of beneficial ownership in the DIAMONDS Trust, a unit investment trust holding a portfolio of the 30 stocks that comprise the Dow Jones Industrial Average (Dow or DJIA). DIAMONDS closely track (before expenses) the DJIA. Their value approximates 1/100 the value of the DJIA. DIAMONDS work like no-load index funds but trade like stocks affording the investor benefits of both. They are passively managed, so their fund management charges are comparatively low. DIAMONDS offer a diversified portfolio, monthly cash dividends and the ability to buy or sell them at any time during the trading day. DIAMONDS are not subject to the “uptick rule” unlike stocks and can be sold short even in a downtick. Also, investors can trade DJX options against each 100 units of DIAMONDS they hold. DIAMONDS can depreciate in value when DJIA goes down. Price may not conform to the real market if trading is halted in any of the component stocks of DJIA, as fund units continue to be traded.
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This glossary post was last updated: 9th February 2020.