The iShares S&P 500 ETF (ASX: IVV) has suffered a significant dip since 31 January 2025, it's down 13.7%, as the chart below shows.
There are plenty of exchange-traded funds (ETFs) on the ASX to choose from, and I often call the IVV ETF one of the best ideas to consider.
However, the recent announcements by the US administration have put the question in some investors' minds of whether the US dollar, US stocks and US bonds are as stable and appealing as they were a few months ago. Tariffs on most goods from most countries has increased uncertainty on what's going to happen with the US and global inflation and the economy.
Despite all of that, I believe the IVV ETF is still a compelling investment for the long-term. Let me explain why I'm still optimistic about it.
It's still extremely low cost
One of the main attractions of this fund has been the incredibly low management fee, and that remains the same.
It still has an annual cost of 0.04%, which means all of the gross returns generated by this fund stay in the hands of investors in the form of net returns.
While costs aren't everything, they play an important part in long-term returns. The effect of fees on wealth can have a negative long-term compounding impact.
Excellent, global businesses
There is uncertainty in the air about how much the US economy will grow in the shorter-term and what could happen to inflation and costs. But, the businesses inside the IVV ETF are still the same names as they were a few weeks ago.
Those names include Apple, Microsoft, Nvidia, Amazon.com, Meta Platforms, Alphabet, Berkshire Hathaway, Broadcom, Tesla, JPMorgan Chase, Eli Lilly and Visa.
These businesses earn a significant chunk of their profit in the US, but they also make substantial money outside of the US. I believe their earnings are more diversified than what some investors are giving them credit for.
I think global demand for smartphones, computer software (and hardware), online video, non-cash payments, cloud computing and so on will continue to grow in the longer-term, and therefore the earnings of these companies could rise, justifying future gains and returns for investors.
Cheaper valuation
I'd rather buy good businesses at a cheaper price than a higher price.
We're being presented with a lower price because of the tariff trade war – share prices don't usually drop for no reason.
It can take a certain amount of bravery to invest when there's fear and anxiety in the market, which is affecting investor confidence.
With the IVV ETF down 14% in just a couple of months, I think this could be a good time to be a contrarian investor (with a long-term mindset).
