For most investors, the simplest path to long-term wealth isn't about picking the next big winner — it's about owning a broad slice of the market and letting compounding do the work.
Few strategies have stood the test of time better than this one. In fact, legendary investor Warren Buffett has long said that most people would be better off forgetting stock picking entirely and simply investing in a low-cost S&P 500 index fund.
For Australian investors looking to follow that advice, one option stands out.
That is the iShares S&P 500 ETF (ASX: IVV).
It offers instant exposure to 500 of the largest and most successful companies in the United States — and it does so in one ASX trade.
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What is the iShares S&P 500 ETF?
The iShares S&P 500 ETF is a simple yet powerful investment vehicle. It tracks the performance of the S&P 500 Index, which includes a wide range of large-cap U.S. companies across all major sectors.
These aren't speculative small caps or unproven startups — they are the names that dominate global business. The index includes household brands like Apple, Microsoft, Amazon, Alphabet (Google), Berkshire Hathaway, Johnson & Johnson, Tesla, and Visa.
Because the S&P 500 is market capitalisation-weighted, larger companies have a bigger impact on performance. That means the IVV ETF naturally tilts toward the businesses driving innovation, growth, and profitability in the U.S. economy.
But despite its U.S. focus, the reach of these companies is truly global. From cloud computing and pharmaceuticals to consumer electronics and financial services, the S&P 500 reflects the modern global economy.
Why it could be a top pick
What makes the iShares S&P 500 ETF so compelling is that it quietly combines three critical ingredients for long-term investing: diversification, discipline, and low costs.
First, diversification. This ASX ETF spreads your investment across 500 companies from a wide range of sectors, reducing the impact of any one business or industry struggling. Over time, that built-in diversification helps smooth out returns.
Second, discipline. Rather than trying to time the market or chase fads, this fund simply follows a rules-based index that updates automatically. It requires no guesswork, no crystal ball, and no emotional trading decisions.
And third, cost. With a management fee of just 0.04%, the iShares S&P 500 ETF is one of the cheapest ETFs available. That's especially important over the long haul, as lower fees mean more of your return stays in your pocket.
Strong long-term track record
Historically, the S&P 500 has delivered impressive returns. Over the past 50 years, it has returned around 10% per annum, on average, including dividends.
While short-term performance can vary — and there will be market downturns — the long-term trend has been consistently upward.
That's why Buffett has often said that a low-cost S&P 500 index fund is the best investment most people can make, especially if they're looking to grow wealth over decades.
The numbers back him up. The index has provided long-term investors with strong returns, benefiting from the compounding power of U.S. corporate earnings, innovation, and global scale.
Foolish takeaway
If you're looking for one ETF to buy and hold, the iShares S&P 500 ETF could be one of the best options available on the ASX. With exposure to world-class businesses, minimal fees, and a track record that speaks for itself, it captures the essence of what long-term investing is all about.
Warren Buffett has made it clear. Most investors don't need to try to beat the market, they just need to own it.
