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?

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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.

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