Vanguard has launched the Vanguard S&P 500 US Shares Index ETF (V500), which is essentially identical to BlackRock’s iShares S&P 500 ETF (IVV). Both track the same index, so what is the actual difference between V500 and IVV?
For those with a long memory, the launch of V500 might bring to mind the Slazenger V-series cricket bats, famously used by Mark Waugh, which included the V500 model. But is Vanguard’s ETF as elegant as a Mark Waugh glance off the pads?
Spot the Difference
Both V500 and IVV track the S&P 500 index, are domiciled in Australia, use the Australian dollar as the base currency, and distribute and rebalance quarterly.
The only significant difference is the cost. V500 has a management fee of 0.07% p.a., whereas IVV has a more competitive management fee of 0.04% p.a.
| V500 | IVV | |
| Domiciled | Australia | Australia |
| Fee | 0.07% | 0.04% |
| Size | N/A | $12.6B |
| Base currency | AUD | AUD |
| Hedged version | V5AH | IHVV |
| Distributions | Quarterly | Quarterly |
| Benchmark | S&P 500 Net Total Return Australian Dollars Index | S&P 500 Net Total Return Australian Dollars Index |
v500 top 10 holdings
The top ten holdings for both ETFs, tracking the S&P 500, would be identical:
| NVIDIA CORP. |
| APPLE INC. |
| MICROSOFT CORP. |
| AMAZON.COM INC. |
| ALPHABET INC CL A |
| BROADCOM INC |
| ALPHABET INC CL C |
| META PLATFORMS INC |
| TESLA MOTORS INC. |
| BERKSHIRE HATHAWAY INC. |
IVV vs V500: Which Should You Hold?
Aside from a higher management fee, there is no practical difference between IVV and V500. Most self-directed investors who already desired US exposure have likely adopted IVV. Given the higher management fee for V500, there is little reason for existing IVV investors to switch.
Why Did They Make It?
Previously, Vanguard in Australia did not offer an Australian-domiciled US equity ETF. Investors could access US equities through their MSCI Index International Shares ETF (VGS) or one of their diversified offerings. They also offered a US-domiciled US Total Market Shares Index ETF, but this often created unnecessary tax complexity for Australian investors.
The launch of V500 rounds out their product range with a tax-simplified ETF.
While V500 is more expensive than IVV, and may not attract switches, this appears to be a strategic move to capture investors who are brand loyal to Vanguard. Additionally, V500 is expected to be available shortly on the Vanguard Personal Investor platform, which currently only offers Vanguard funds and ETFs. This provides those platform investors with a reasonably priced option for pure US exposure.
Final Verdict
This product launch is less about creating a new competitor to IVV and more about creating Vanguard’s own vehicle to fill a gap in their product range. It empowers Vanguard Personal Investor account holders with the ability to better curate their holdings. The Rask Group, for its part, happily maintains its position in IVV.
