You Can Do Better Than the Dow Jones. Buy This ETF Instead.

The arguments for simply buying and holding a basket of blue chip stocks like those in the Dow Jones Industrial Average (DJINDICES: ^DJI) are solid to be sure. This group of stocks is inherently well diversified, for instance, in addition to being market stalwarts. Standard Poor's also regularly updates the Dow's 30 stocks. Perhaps best of all, a long-term investment in an instrument like the SPDR Dow Jones Industrial Average ETF Trust (NYSEMKT: DIA) is simple, and it doesn't require any real maintenance or monitoring.

If you'd like to beat the Dow's long-term performance, however, there's another equally simple exchange-traded fund (or ETF) that's up for the job. And, it's probably not the one you think.

There was a time when the Dow Jones Industrial Average was the only meaningful market barometer. Even after the S 500 index (SNPINDEX: ^GSPC) was created in its current form back in 1957, however, the Dow remained an important indicator of the overall market's health; it's only been in the modern era that the Dow began lagging the S 500's performance, mostly because it holds relatively fewer growth stocks. Well, that, and the fact that the cap-weighted S&P 500 is now overwhelmingly dominated by some of the market's fastest-growing companies (and their fastest-rising stocks) like Microsoft, Apple, Nvidia, Alphabet, and Amazon. These five names alone account for nearly one-fourth of the S 500's value! The same is true of the SPDR S 500 ETF Trust (NYSEMKT: SPY), which is the go-to option for most investors who just want to plug into the broad market's overall performance.