For many ASX investors who want to look (and invest) beyond our shores, the iShares S&P 500 ETF (ASX: IVV) is a popular choice.
It's not difficult to see why. For one, the S&P 500 Index (SP: .INX) is the most widely tracked in the world, with its appealing exposure to the largest 500 stocks on the American markets.
For another, S&P 500 index funds are routinely endorsed by none other than legendary investor Warren Buffett as suitable for almost every investor. Now that's a feather in the cap if there ever was one, and, for many investors around the world, all they need to hear.
But if you follow Buffett's advice and buy the only S&P 500 Index Fund on the ASX – IVV – what exactly are you getting for your money?
That's what we'll be diving into today.
The S&P 500: Dominated by 'the Magnificent Seven'
Well, we have to start with the obvious: an investment in an S&P 500 ETF like the ASX's IVV will result in a significant chunk of your capital going towards the 'Magnificent Seven' tech stocks. These technology titans, which include Apple, Microsoft, Amazon, Alphabet, Tesla, NVIDIA and Meta Platforms, have grown so much in recent years that they now collectively account for nearly 31% of IVV's portfolio.
So, out of a portfolio of 500 stocks, almost a third of your capital will go towards just seven names right now with an ASX investment in the IVV ETF.
These companies are high-calibre businesses, which has resulted in their ascending to the top of the world's most competitive stock market. But even so, ASX investors need to be at peace with this reality if they wish to invest in the S&P 500 ETF on the ASX today.
But what of the other 500 stocks you'd be getting with an ASX investment in IVV right now?
What other shares does the IVV ETF offer to ASX investors?
The iShares S&P 500 ETF's top 10 stocks also include Buffett's own Berkshire Hathaway, tech stock Broadcom, and pharmaceutical company Eli Lilly.
If we go into the top 20, we'll see names like investment bank JPMorgan Chase, oil giant Exxon Mobil, and payments leaders Visa and Mastercard.
You'll also find Home Depot (the American equivalent to our Bunnings), Johnson & Johnson (owner of the Band-Aid and Listerine brands), Procter & Gamble (the company behind Fairy dishwashing liquid, Gillette razors and Pantene shampoo) and supermarket stock Costco Wholesale.
These companies all have significant global scale and dominance in their respective fields. Their diversity and strength is why Waren Buffett calls the S&P investment buying 'a slice of America'.
For ASX investors in the IVV ETF, that's what you're getting with an investment today.
