The exchange-traded fund (ETF) iShares S&P 500 ETF (ASX: IVV) is one of my favourite funds, but it has been having a tough time recently.
The chart below shows the IVV ETF has declined approximately 10% since 31 January 2025. That's a fairly large decline in a short amount of time for a diversified portfolio.
Being able to buy a top investment at a better price is appealing in my eyes.
I'd normally point out the usual attractive features of this ASX ETF, such as its low management fees (of 0.04% per year), its long-term track record (an average of 15.4% per year over the decade to February 2025), and the diversified nature of its holdings (500 businesses with global underlying earnings).
Those points are all still true, and that alone makes the IVV ETF an appealing option. But I'm going to highlight a couple of different points today.
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The IVV ETF's companies can continue growing profit
Declines in share prices are concerning to see, but it doesn't necessarily mean that the long-term value of those businesses has reduced.
The share market is just a reflection of what price buyers and sellers of shares are transacting at on any particular day. Buyers are willing to pay more in some periods, while other times can see sellers being willing to accept lower prices (and buyers not wanting to pay a high price).
A share price reduction doesn't change how much profit a business is making or will make in five years.
Companies like Microsoft, Apple, Meta Platforms, Alphabet, and Amazon have shown excellent skill in growing earnings over time. Regardless of tariffs or any other geopolitical issues, I think the biggest companies in the IVV ETF have the quality and ability to continue growing earnings this year, in the next four years, and in the next ten years.
The US share market has come through numerous problems before
This isn't the first time the US share market has fallen approximately 10%. Indeed, it's happened multiple times since the start of 2020. Stocks also suffered heavily through the GFC and a number of other financial crises in the past century.
The current IVV ETF unit price reflects a rise of more than 200% in the past decade despite all the economic issues and political turmoil. Thankfully, past problems fade into the distance.
I don't have a crystal ball to predict what will happen next, but I think it pays to be optimistic about the share market's future.
Market declines don't come along very often, and I think it's a great time to invest when corrections (or worse) do occur. If the IVV ETF unit price does decline further, I think it'd be an even more attractive investment.
