Pfizer Is Out, Honeywell Is In: Should The Dow Jones Shake-Up Change Your Investing Strategy?

Three of the 30 stocks that make up the Dow Jones Industrial Average will be replaced at the end of this month. Standard & Poor's, which manages the blue-chip index, announced on Monday that current constituents ExxonMobil (NYSE: XOM), Pfizer (NYSE: PFE), and Raytheon Technologies (NYSE: RTX) will be swapped out with Salesforce.com (NYSE: CRM), Amgen (NASDAQ: AMGN), and Honeywell International (NYSE: HON), respectively.

Updates of the Dow's components aren't unusual. Not including changes stemming from mergers and acquisitions, Standard & Poor's altered the Dow's components most recently in 2018 when it replaced General Electric with Walgreens Boots Alliance. Like the recently announced restructuring, that one was ultimately intended to make the Dow a more accurate cross-section of the U.S. market.

Still, when 10% of an entire index's holdings are scheduled for replacement in one sweeping move, it could lead buy-and-hold investors that own Dow-based index funds to wonder how much buying-and-holding they're really able to do with those instruments. If that's you, don't worry. The overdue move actually makes it more comfortable for long-term investors to own Dow-based ETFs and mutual funds.

Source Fool.com