The iShares S&P 500 ETF (ASX: IVV) has done incredibly well since the start of 2023 and over the long term. In 2023 it has gone up by 22% and over the last five years it has risen by around 75%, as we can see on the chart below.
The exchange-traded fund (ETF) represents 500 of the biggest and strongest companies in the US like Apple, Microsoft, Amazon.com and Alphabet. The 2022 calendar year was tough for many of the US giants amid all of the worries about inflation and interest rates.
But this year has seen valuations recover strongly for a number of the US businesses.
Is it too late to invest in the IVV ETF?
It's true that the iShares S&P 500 ETF has already gone up a lot, and it would have been better to invest in December 2022, or even five years ago.
But I don't think it's too late to invest. Over the long-term, we've seen the ETF continue to rise, I'd only say it's too late to invest if it wasn't going to rise any more – would it be worth investing in something that had no chance of going up?
We've seen the IVV ETF deliver an average return per annum of 14% over the past five years, though there's no guarantee at all that it will rise over the rest of this year, or in the longer term.
It has reached all-time highs in a number of years recently – this year, 2021, 2020, 2019 and so on. I believe it pays to be positive about the long-term when it comes to investing, even when valuations may seem a little stretched sometimes.
Why should investors want exposure to the iShares S&P 500 ETF?
It has an extremely low annual management fee of 0.04%, which is one of the lowest of all of the ETFs on the ASX. That's great for keeping the returns in the hands of investors rather than giving it to a fund manager.
It's invested in many of the world's best businesses, largely because a lot of them are listed in the US.
There are many other high-quality positions in the portfolio that have helped returns and can support future returns, such as Warren Buffett's Berkshire Hathaway, Meta Platforms (Facebook and Instagram), Costco, Visa, Mastercard and Walmart. The fact that it's invested in 500 businesses means that it has a lot of diversification, and I think it'd be hard to find another ETF that is as diverse (by number of holdings, and industry allocation) but has as good holdings as the IVV ETF.