How did the iShares S&P 500 ETF (IVV) race ahead of the ASX 200 in FY 2024?

IVV shares delivered more than three times the gains of the ASX 200 in FY 2024. But how?

| More on:
Two couples having fun racing electric dodgem cars around a track

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The iShares S&P 500 ETF (ASX: IVV) smashed the returns delivered by the S&P/ASX 200 Index (ASX: XJO) in the financial year just past.

Shares in the exchange-traded fund (ETF) closed out FY 2023 trading at $44.45. On 28 June, the last trading day of FY 2024, shares were swapping hands for $55.43.

That saw the IVV share price up an impressive 24.7% over the financial year, racing ahead of the 7.8% gains posted by the ASX 200 over this same time.

And these strong gains don't include the 66 cents a share in unfranked dividends the ASX ETF paid out in four quarterly instalments over the year. These see IVV currently trading on an unfranked trailing dividend yield of 1.2%.

So, how did the ETF manage to reward shareholders so well?

I'm glad you asked!

Why did the IVV share price outpace the ASX 200 in FY 2024?

As its name implies, the iShares S&P 500 ETF aims to track the performance of the S&P 500 Index (INDEXSP: .INX).

And it did a very good job of it, with the S&P 500 gaining 22.7% during FY 2024.

IVV currently holds 503 United States listed stocks, with the US tech giants making up its biggest holdings.

At the time of writing, the ASX ETF's top five holdings are:

A look at these five stocks alone goes a long way to explaining IVV's strong showing over the past financial year.

These tech giants are at the forefront of the global artificial intelligence (AI) revolution that's been grabbing global and ASX investor interest.

But it's not just companies like Nvidia and Apple that stand to benefit from the efficiencies delivered by AI. The rapidly evolving tech has been credited for much of the big boost enjoyed by many of the companies listed on the S&P 500.

Adding in that inflation in the US is cooling faster than here in Australia, and investors have been upping their bets of at least one interest rate cut from the Federal Reserve in 2024.

That's also helped the S&P 500 and, by connection, the IVV share price race ahead of the ASX, with the US benchmark notching a lengthy series of new record highs over the past months.

As for FY 2025, the iShares S&P 500 ETF share price is currently down 0.52% half-way into week two of the new financial year.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has recommended Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ETFs

Australian dollar notes in businessman pocket suit, symbolising ex dividend day.
ETFs

Own the Vanguard Australian Shares Index ETF (VAS)? Here's how much you'll get paid today

Today's VAS paycheque might disappoint some investors.

Read more »

Cubes placed on a Notebook with the letters "ETF" which stands for "Exchange traded funds".
ETFs

Why I'd still call the FANG+ ETF a buy

The US tech giants have been great performers.

Read more »

The letters ETF with a man pointing at it.
ETFs

Buy and hold these ASX ETFs until 2030

Looking for long term options? Check out these picks.

Read more »

Contented looking man leans back in his chair at his desk and smiles.
ETFs

Should Aussies choose Vanguard Australian Shares Index ETF (VAS) or a term deposit for passive income?

Both investment options come with positives and negatives.

Read more »

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
ETFs

Where to invest $5,000 into ASX ETFs in July

Could these funds be a good place to invest your money?

Read more »

A woman sits at her desk thinking. She is surrounded by projections of world maps on various screens with data appearing below them.
ETFs

These top ASX global shares ETFs delivered stunning returns of 50% to 70% last year

We reveal the 6 best-performing ASX ETFs providing Aussie investors with international market exposure.

Read more »

Five people are leaping in the shallows of the beach water as sunset shines gold on them.
ETFs

Which Australian shares ASX ETFs have dished out the best returns over 3 years?

We reveal the top 5 performers over the past three financial years.

Read more »

excited young female in business attire and wearing glasses is holding up $100 notes in both hands.
ETFs

Own iShares S&P 500 ETF (IVV) units? It's payday for you!

It’s another rewarding day to be a IVV ETF unitholder.

Read more »