The Dow Jones Industrial Average may be getting all the attention right now, but when it comes to indexed mutual funds, it's the S&P 500 that gets all the respect.

Powered by enduring brand names like General Electric ( GE), General Motors ( GM) and Sears ( S), the 103-year-old Dow sets the tone for the world's financial markets.

But investors have been flinging their money at Standard & Poor's younger market benchmark, which includes all the companies in the Dow and then some. While the 105 S&P 500-indexed mutual funds tracked by Lipper total a whopping $181.9 billion in assets, there are only three Dow-indexed funds in Lipper's database, and they hold a mere $148.5 million.

One reason for the discrepancy, says Richard Maroney, portfolio manager of the ( SDOWX) Strong Dow 30 Value fund, is Dow Jones' ( DJ) reluctance to allow its powerful brand name to be used by other financial institutions. "They didn't license the name until last year," says Maroney.

That's when Strong and the ( WDOWX) Waterhouse Dow 30 fund got their start. At the same time, a third Dow fund, the ( ASMUX) ASM Index 30, which was already tracking the index, added "Index 30" to its name to reflect its Dow investment objective.

Another reason the S&P funds have dominated is the greater diversification these funds offer, which makes them more attractive to Wall Street's big money institutions, says Courtney Smith, chief investment officer at Orbitex Management, the adviser to the $25.6 million ASM Index 30 fund.

The S&P also has outperformed the Dow in recent years, fueled by high-octane technology companies like Microsoft ( MSFT) and Intel ( INTC), both of which are in the S&P but not in the DJIA. Over the past 10 years, the S&P 500 returned 481.8%, just ahead of the 474.6% return of the Dow. But over the past five years, the margin is wider: 208.9% for the S&P vs. 186.7% for the Dow.

Still, the S&P 500 funds' popularity doesn't dampen the spirits of those who run the few Dow funds, especially now that their index is sporting five digits.

"Yes, it's just a number," says David Hartman, chief investment officer at Waterhouse Asset Management, which runs the $92 million Waterhouse Dow 30 fund. "But it's certainly a significant milestone. It's a measure that the public gives to the economy in general and will have a very positive impact overall."

Hartman says the S&P's higher technology weighting has allowed it to outperform the Dow but that technology's ascent won't last forever. "As strong as the technology sector has been, at one point it will become overvalued, and we should be getting some periods of outperformance of the Dow," he says.

Hartman calls the Dow, now trading at an average price-to-earnings ratio of about 24.6 times trailing earnings, a better value than the S&P, which is trading at about 28.8 times last year's earnings.

Orbitex's Smith agrees the Dow will have its day. "If you take a look recently, you can see the Dow 30 is leading the charge," says Smith. "Right now what we are seeing is that large value stocks in general are outperforming growth."

Dow Index Funds By the Numbers
Fund Annual Expenses YTD Returns*
(SDOWX) Strong Dow 30 Value 1.55% 7.7%
(WDOWX) Waterhouse Dow 30 0.25% 7.6%
(ASMUX) ASM Index 30 0.42%** 7.4%
S&P 500 N/A 5.3%
Source: Lipper; *through 3/25; **0.91% beginning 4/24

Hartman's Waterhouse Dow 30 and Smith's ASM Index 30 fund are pure index plays, while the Strong Dow 30 Value fund mixes active and passive management. Waterhouse plans to remain a passive fund, Hartman says. But Orbitex hopes to use its research team to add an actively managed component to enhance the ASM fund's performance.

Orbitex is only a temporary manager for the ASM fund, which it took over this month. But once shareholders approve Orbitex as the fund's permanent adviser, "we want to look at covered call writing as a way to create low-risk high returns, and we also want to focus the fund and tilt it a little more in the direction of overweighting the 20 best Dow stocks in the index," says Smith.

At Strong Dow 30 Value, only half of the $30.9 million in assets is used to replicate the index. The other half is concentrated in the benchmark's best buys, as determined by a quantitative model.

The model screens price-to-earnings, price-to-sales and price-to-cash-flow ratios to find the best value candidates among the Dow 30 stocks. Then the managers use discounted cash flow analysis and consider the dividend yields to make their final selection.