US stocks delivered an outstanding performance in 2024, with one of Aussie investors' favourite exchange-traded funds (ETFs), the iShares Core S&P 500 AUD ETF (ASX: IVV), rising 35.33% in value.
The ASX IVV delivered total returns (including dividends) of 37.34%, according to preliminary numbers yet to be confirmed by ETF provider iShares.
The IVV ETF closed the year at $63.24 per unit on 31 December. It hit a record high of $64.79 per unit on 27 December.
The ASX IVV seeks to track the performance of the S&P 500 Index (SP: INX), which represents the 500 largest US stocks, before fees.
According to the S&P Global website, the S&P 500 rose by 23.31% to close at 5,881.63 points on 31 December. If we add dividends, the S&P 500's total gross return for the year was 25.02%.
(The disparity between the growth rate of the S&P 500 and the ASX IVV is due to the currency exchange. In AUD terms, S&P Global reports that the S&P 500 rose by 35.9%, with total gross returns of 37.78%.)
The S&P 500 significantly outperformed the benchmark S&P/ASX 200 Index (ASX: XJO), reminding us of the importance of geographical diversification in our investment portfolios.
The ASX 200 delivered a healthy but vastly inferior total gross return of 11.44%.
US shares grew strongly due to investor enthusiasm, excitement over artificial intelligence (AI), a resilient economy, Donald Trump's US presidential election, interest rate cuts in the second half of 2024, and other factors.
JP Morgan Global Market Strategist Ian Hui said the Magnificent Seven also powered the S&P 500's rise due to the companies' projected earnings growth of 36.2% vs. 3.1% for the balance of the index.
The Magnificent Seven US shares are Meta Platforms, Amazon, Apple, Alphabet, Nvidia, Microsoft and Tesla.
Australian investors were certainly mindful of the runaway US market in 2024. Vanguard reported much larger inflows into exchange-traded funds holding international shares (mostly US shares) last year.
Stake market analyst Samy Sriram said the iShares Core S&P 500 AUD ETF was the most popular equity purchased via the online trading platform last year. (Check out the 10 most bought US shares here).
Which stocks in the iShares S&P 500 AUD ETF rose most in 2024?
According to Market Watch, these were the 10 best-performing US stocks within the ASX IVV in 2024.
| US stock | Share price growth in 2024 |
| Palantir Technologies Inc (NASDAQ: PLTR) | 340.5% |
| Vistra Corp (NYSE: VST) | 257.9% |
| Nvidia Corp (NASDAQ: NVDA) | 171.2% |
| United Airlines Holdings Inc (NASDAQ: UAL) | 135.3% |
| Axon Enterprise Inc (NASDAQ: AXON) | 130.1% |
| Texas Pacific Land Corp (NYSE: TPL) | 111% |
| Broadcom Inc (NASDAQ: AVGO) | 107.7% |
| Targa Resources Corp (NYSE: TRGP) | 105.5% |
| Howmet Aerospace Inc (NYSE: HWM) | 102.1% |
| Constellation Energy Corp (NASDAQ: CEG) | 91.4% |
Can US shares keep going like this in 2025?
Top broker Goldman Sachs forecasts the S&P 500 to return 10% in 2025. Goldman's research team predicts the S&P 500 will rise to 6,500 points by the end of 2025.
David Kostin, Goldman's chief US equity strategist, expects the S&P 500 will have a third consecutive year of gains amid strong economic expansion and earnings growth of 11% in the new year.
JP Morgan's Hui says there are early signs that investors are starting to move away from the Magnificent Seven due to their high valuations and still rising but slowing earnings growth rates.
