I believe that iShares S&P 500 ETF (ASX: IVV) could be one of the best investments on the ASX.
The S&P 500 is an index of 500 businesses listed in America, it covers a broad range of companies and the index has existed for many decades.
Here are the reasons why I think it could be the best idea:
Excellent holdings
Compared to the ASX, I think the S&P 500 offers exposure to much more compelling businesses.
The top 10 alone are: Microsoft, Apple, Amazon, Facebook, Berkshire Hathaway, JPMorgan Chase, Alphabet, Johnson & Johnson, Proctor & Gamble and Visa. All of these businesses have good long-term futures and continue to generate growth.
You can look through the holdings and just see great (slightly smaller) businesses like Intel, MasterCard, Walt Disney, Cisco, McDonalds, Costco and so on.
Global underlying earnings
The best way to lower your investment risk is diversification. ASX businesses are mostly focused on Australia, whereas the bigger American businesses create earnings from across the world. Microsoft, Apple, Facebook and Alphabet are in most countries of the world.
Even though the S&P 500 is an American index, you could easily call it a global index with an American slant.
Extremely low management fee
One of the biggest things hurting people's wealth is costs and fees. If you find a fund manager that can outperform after fees, then great, but otherwise just achieving the market average for an extremely low cost can produce excellent results.
iShares S&P 500 ETF has an annual management fee of just 0.04% per annum, which is one of the cheapest you'll find on the ASX. Almost all of the returns remain in the hands of investors, which is great.
Pays income
There are plenty of good investments that don't pay any income to investors. Some investments actually cost investors to hold them (like European bonds, or negative gearing here).
The S&P 500 ETF has a trailing dividend yield of 1.6%. It's certainly not great, but it offers a better yield than some Australian bank accounts and better income growth prospects over the long-term.
Foolish takeaway
I think the S&P 500 could be the best investment to own if you want to take a backseat, passive approach to investing. I haven't invested in it myself, perhaps I will the next time the US has a downturn.
