iShares S&P 500 ETF (ASX: IVV) is a really good investment in my opinion, it’s one of the leading exchange-traded funds (ETFs).
What is iShares S&P 500 ETF?
It’s an ETF that’s based on 500 of the biggest and most profitable listed businesses in the US.
That means it owns many of the large and established companies in America.
You may recognise some of largest businesses in the portfolio like Apple, Microsoft, Amazon, Facebook, Alphabet (Google), Berkshire Hathaway, Tesla, Nvidia, JP Morgan Chase, Johnson & Johnson, Visa, PayPal, Home Depot, Mastercard, Procter & Gamble, Walt Disney and Adobe.
But there are a number of reasons why I think it’s a really good investment to own:
Diversification
The businesses in this portfolio are spread across many different sectors including IT (27.7%), healthcare (12.99%), consumer discretionary (12.26%), communication (11.13%), financials (11.05%), industrials (8.42%), consumer staples (5.84%) and so on.
There’s good diversification with the sectors in the iShares S&P 500 ETF portfolio, and those sectors have 500 businesses between them.
Whilst all of these businesses are listed in the US, many of them make profit from all over the world. Visa and Mastercard are in almost every country in the world.
Fees
Low fees are really good because it means that investors get to keep almost all of the returns in their portfolio rather than losing it. iShares S&P 500 ETF has an annual management of just 0.04%. That’s nice for investors considering Blackrock is a profit-making enterprise.
High-quality holdings
The companies in the IVV ETF portfolio are very high quality. They have very strong market positions.
Imagine being given $10 billion to try to dislodge Apple from their smartphone position or Google from the Search position. I don’t think it would be possible.
Those are the types of investments that I’d want to own in my portfolio. I would be happy to own Apple or Microsoft (and so on) in my portfolio individually. But it’s very easy owning them all in one investment.
Summary thoughts
iShares S&P 500 ETF is a really good investment in my opinion. It ticks many of the boxes you could want. The only thing is that it doesn’t have much of a dividend yield, but that relates to the growth-focus of most of the large positions in the portfolio.
