Is the iShares S&P 500 ETF (ASX: IVV) the best long-term investment right now with everything going on with the coronavirus?
It's rare that we get the chance to buy so many great businesses at cheaper prices despite interest rates around the world being as low as they ever have been. It's widely accepted that when interest rates are lower, valuations should be higher than they otherwise would have been.
What does the iShares S&P 500 ETF offer?
We obviously can't invest in American shares on the ASX. But exchange-traded funds (ETFs) give us the chance to invest in a group of international shares though a single investment.
The S&P 500 is 500 of the biggest and most profitable businesses listed in the US. It provides much better diversification than the ASX ETFs in my opinion. There are a number of other industries represented in the top holdings like technology and consumer goods. And those businesses' earnings come from across the world, so the earnings aren't as at risk if they came from a particular region.
What are some of the top holdings?
At the end of March 2020 its largest holdings were Microsoft, Apple, Amazon, Facebook, Alphabet, Berkshire Hathaway, Johnson & Johnson, JPMorgan Chase and Visa.
Further down the list you'll find shares like Mastercard, Home Depot, Tesla, Netflix, PepsiCo, Walmart, Disney and Costco.
I think it's a high quality list of businesses with most of them having very promising futures.
What is the iShares S&P 500 ETF management fee?
The management fee of an ETF is one of the most important elements. The lower the management fee the more of the returns that are left in the hands of investors.
This ETF has an annual management fee of just 0.04%, which is one of the lowest available to investors on the ASX.
Is it the best long-term investment?
The unit price of iShares S&P 500 ETF has fallen 14.5% since the declines began. The weakening Australian dollar has helped maintain the value for Aussie investors. If we were American it would be down further in American dollar terms.
I think it is one of the best long-term investment options available to Aussies because of all of the high-quality shares. However, I do like the idea of investing in something like MFF Capital Investments Ltd (ASX: MFF) – it invests in global overseas shares, has relatively cheap fees but has the flexibility to invest anywhere in the world. We can buy MFF's share price at a cheaper price compared to its assets per share.
