The iShares S&P 500 ETF (ASX: IVV) is an exchange-traded fund (ETF) that looks like a long-term buy to me.
The latest Middle East events are horrific and have caused yet more uncertainty for the world. But, uncertainty doesn't mean we have to be put off investing in shares.
History has shown that the largest declines and the lowest share prices appear when uncertainty has reached the highest level. There certainly hasn't been a crash recently, but I think right now is a good time to invest for the long-term.
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Long-term performance
The IVV ETF portfolio is invested in 500 of the biggest, strongest and most profitable businesses in the US.
The names within the portfolio have changed over time, but the group as a whole has done very well.
Over the ten years to 30 September 2023, the IVV ETF delivered an average return per annum of almost 16%. Past performance is not necessarily indicative of future performance, but it shows that if an investor had bought units at almost any time over the past five years, they'd have done quite well.
The underlying businesses have collectively grown profit, and this has driven investor returns.
Over time, I think the IVV ETF can keep rising because those underlying businesses are doing their best to keep expanding their operations and increasing profit.
IVV ETF has low management fees
Making gross returns is one thing, but how much an ETF charges in management fees can have a major impact on the net returns. If the fund has expensive fees, then investors are losing out on a sizeable amount of the returns. It's up to each of us to decide if the fees are worth paying with an investment.
The IVV ETF has an annual management cost of just 0.04%, which is one of the lowest options available to Aussie investors going through the ASX.
With fees that low, almost all of the gross returns become net returns, which is one of the main reasons that the iShares S&P 500 ETF has been able to deliver such good net returns over the past decade compared to active fund managers.
Great holdings
This fund is invested in some of the world's strongest businesses like Microsoft, Apple, Alphabet, Amazon.com and Meta Platforms.
One way of thinking about how strong a business is would be this – if I had a large amount of money to set up a business, say $10 billion, would I be able to take meaningful market share from any of their core services?
There are plenty of excellent companies within the portfolio, with great profitability, solid balance sheets and compelling futures, such as Nvidia, Tesla, Berkshire Hathaway, Visa, Mastercard, Costco, Walmart and so on.
While the ETF isn't specifically designed to own quality businesses, it is an impressive portfolio that regularly updates to own the best the US-listed markets have to offer.
