Strategic Guide to Buying Low-Cost Index Funds: Comparing IVV and DIA

When considering where to buy low in the index fund space, investors face a fundamental choice between broad market exposure and concentrated blue-chip stocks. The iShares Core S&P 500 ETF (IVV) and the SPDR Dow Jones Industrial Average ETF Trust (DIA) represent two distinctly different approaches to gaining core U.S. equity exposure. While both track established indexes, they diverge significantly in cost structure, portfolio concentration, and long-term performance—factors that should guide your investment strategy.

Cost Efficiency: Where the Buy Low Advantage Emerges

IVV presents a compelling case for cost-conscious investors. With an expense ratio of just 0.03% annually, IVV charges significantly less than DIA’s 0.16%—a difference that compounds substantially over decades of investing. To illustrate: on a $100,000 investment, you’d pay $30 per year with IVV versus $160 with DIA. Over a 30-year horizon, that gap widens considerably through reinvested savings.

DIA does compensate somewhat through a higher dividend yield of 1.4% compared to IVV’s 1.05%, appealing to income-focused investors. However, for those seeking to buy low and hold for growth, IVV’s fee advantage typically outweighs this modest income differential. The cost structure becomes particularly relevant during market downturns—when you truly get to buy low—because lower expenses mean more of your capital works for you rather than supporting fund management.

Portfolio Composition: Concentration vs. Diversification

The fundamental difference between these funds lies in their scope. IVV tracks the entire S&P 500 universe of approximately 500 large-cap U.S. stocks, while DIA maintains a tightly focused portfolio of just 30 blue-chip companies. This concentration explains their distinct risk profiles and holding characteristics.

DIA’s top three positions—Goldman Sachs Group (11.61% weighting), Caterpillar (7.92%), and Microsoft (5.86%)—significantly influence the fund’s overall performance. The fund’s sector allocation emphasizes financial services (27.5%), technology (18.9%), and industrials (15.8%), reflecting a tilt toward traditional economy companies.

IVV, by contrast, distributes holdings across a broader base with technology representing 33.65% of the portfolio, followed by financial services (12.8%), communication services (10.67%), and consumer discretionary (10.5%). Its top holdings include Nvidia, Apple, and Microsoft, each comprising a smaller portfolio slice. This diversified approach means individual stock movements have less dramatic effects on fund performance.

Risk and Performance: Volatility Matters

Historical data reveals the performance divergence clearly. Over the five-year period ending January 26, 2026, IVV generated a 5-year growth factor of 1.814 (meaning $1,000 became $1,814), while DIA produced 1.582 ($1,000 became $1,582). Over the trailing 12 months, IVV delivered 15.4% total return versus DIA’s 13%.

More telling is the maximum drawdown comparison. IVV experienced a maximum decline of -27.67% over five years, while DIA suffered a steeper -43.43% drawdown. This volatility differential stems directly from concentration risk—when a handful of holdings decline sharply, a concentrated fund experiences magnified losses. DIA’s heavy weighting in specific financial and industrial names exposed it to larger downside swings.

The beta measurements underscored this: IVV maintains a beta of 1.00 (moving in line with the S&P 500), while DIA’s 0.89 beta suggests lower volatility in theory, yet its actual drawdown experience contradicts this metric, highlighting how concentrated portfolios can exhibit unexpected risk patterns.

Asset Scale and Fund Maturity

IVV commands $763 billion in assets under management, reflecting its position as a market standard for broad U.S. equity exposure. DIA manages $44.1 billion with a 28-year track record of tracking the Dow Jones Industrial Average. The size differential matters less than the philosophical approach each fund represents.

Making Your Investment Decision: When to Buy Low

For diversification-focused investors: IVV represents the gold standard. By capturing 500 stocks across multiple sectors and market capitalizations, IVV provides genuine portfolio diversification. When markets decline and you encounter opportunities to buy low, the broader exposure protects against concentration risk while offering lower-cost access to the full U.S. stock market opportunity set.

For income and blue-chip quality investors: DIA appeals to those prioritizing dividend income and established company names. The 1.4% yield attracts income-focused strategists, though the higher volatility profile and 0.16% expense ratio mean you’re paying more for concentrated exposure.

The practical approach: Most investors benefit from building their core U.S. equity allocation with IVV, appreciating its 0.03% expense ratio, broader diversification, and lower volatility profile. IVV’s superior performance over both one-year and five-year periods reinforces its advantage, particularly during market corrections when the ability to buy low becomes actionable.

The $763 billion in IVV assets reflects institutional recognition of these benefits. For investors seeking straightforward, cost-efficient core market exposure with minimal frictional costs eroding returns, IVV’s low-cost structure and comprehensive market coverage make it the preferred vehicle when looking to consistently buy low across the economic cycle.