Should you invest in iShares S&P 500 ETF (ASX:IVV)? (2024)

FAQs

Should you invest in iShares S&P 500 ETF (ASX:IVV)? ›

IShares Core S&P 500 ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IVV is an outstanding option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market.

iShares Core S&P 500 ETF (IVV) has seen total returns of 26.48% over the past 1 year, 14.77% p.a. over the past 3 years and 16.30% p.a. over the past 5 years, as of 30 June 2024.

Investing in an S&P 500 fund can instantly diversify your portfolio and is generally considered less risky. S&P 500 index funds or ETFs will track the performance of the S&P 500, which means when the S&P 500 does well, your investment will, too. (The opposite is also true, of course.)

Currently there's no upside potential for IVV, based on the analysts' average price target. Is IVV a Buy, Sell or Hold? IVV has a consensus rating of Moderate Buy which is based on 402 buy ratings, 94 hold ratings and 8 sell ratings.

Given the breadth of coverage and the cost efficiency, iShares S&P 500 ETF IVV is a fine choice for investors seeking US-specific equity exposure. The strategy is expected to outperform its peers over the long term and remains the clear choice for investors to gain US exposure.

SPY, VOO and IVV are among the most popular S&P 500 ETFs. These three S&P 500 ETFs are quite similar, but may sometimes diverge in terms of costs or daily returns. Investors generally only need one S&P 500 ETF.

However, the S&P 500's composition has changed significantly over the years, and many investors might not be aware that the index is at a record-high level of concentration. This concentration poses significant risks as the index's performance becomes heavily dependent on the fortunes of only a few companies.

So imagine you put $1,000 into either fund 10 years ago. You'd be up to roughly $3,282 with VOO or $3,302 from SPY. That's not exactly wealthy, but it shows how you can more than triple your money by holding an asset with relatively low long-term risk.

Investing in the S&P 500

You can't directly invest in the index itself, but you can buy individual stocks of S&P 500 companies, or buy a S&P 500 index fund through a mutual fund or ETF. The latter is ideal for beginner investors since they provide broad market exposure and diversification at a low cost.

Is IVV high risk? ›

Blackrock has stated the $IVV ETF is appropriate for investors with a medium-to-high risk/return profile. This does not constitute financial product advice nor a recommendation to invest in the securities listed. Past performance is not a reliable indicator of future performance.

For example, SPDR S&P 500 ETF Trust (SPY) has a 0.09% expense ratio, while IVV has only a 0.03% expense ratio. For long-term investors, this is important as the fees add up over the long term. Thus, IVV is preferred over SPY.

IVV has a dividend yield of 1.31% and paid $7.19 per share in the past year. The dividend is paid every three months and the last ex-dividend date was Jun 11, 2024.

Overall Rating

Morningstar has awarded this fund 4 stars based on its risk-adjusted performance compared to the 1302 funds within its Morningstar Category.

As of June 2024, over the analyzed timeframe, the iShares Core S&P 500 (IVV) ETF obtained a 8.27% compound annual return, with a 15.25% standard deviation.

The Vanguard fund has a lower price-to-earnings ratio, at 17.4 times, compared with 18.3 for iShares. This is due to the lower weighting to the highly rated US market. Fees are comparable, with iShares costing 0.2% and Vanguard costing 0.22%.

ETFs, such as iShares S&P 500 ETF (IVV), pay distributions instead of dividends. The difference is that dividends are declared by companies from part of the profits made during any given year and the company's management decide the amount of earnings retained verses how much to pay out to investors.