One of the best and highest-performing exchange-traded funds (ETFs) over the past decade has been iShares S&P 500 ETF (ASX: IVV). After such a strong run by the US share market, investors may be wondering if it's still a buy or not.
The fund aims to provide investors with exposure to the S&P 500, which are 500 of the biggest and most profitable businesses listed in the US.
As the chart below shows, the IVV ETF unit price has climbed significantly over the past decade.
In the ten years to 31 August 2025, the fund has delivered an average net return per year of 15.3%. That's an exceptional net return that almost any fund manager would be pleased with.
Of course, past performance is not a guarantee of future performance. I'm not expecting the next decade to be as good as the last decade. However, there are a few reasons why I think it could still be a solid buy for the long-term. So, let's get into it.
Falling interest rates
Interest rates can play a key role in what valuation investors think businesses within the IVV ETF should trade at.
Interest rates soared to try to tame elevated inflation. Central bankers seem satisfied that the battle against inflation has been won, allowing rate cuts in the past year.
However, the job market now seems to be stuttering in the US, which could mean there is an overall weakening of the economy.
This month, the US Federal Reserve cut the Federal Funds Rate by 25 basis points to between 4% and 4.25%. Rate-setting members are expecting further rate cuts in the next year or so.
Why is this a good thing? Interest rates act like gravity – the lower they go, the more asset prices can jump. If the US interest rate does keep drifting lower, that's a powerful tailwind for share prices.
Excellent businesses
When I think about which stocks I want to own, I'd highlight leading businesses that are delivering growth and have compelling outlooks long-term success.
The companies in the IVV ETF portfolio have already delivered exceptional performance and continue to invest in new products and services.
Areas like AI, cloud computing, online video, self-driving cars, online advertising, e-commerce and more are being driven by the biggest companies in the portfolio such as Nvidia, Microsoft, Apple, Amazon, Meta Platforms, Broadcom, Alphabet, Tesla and Netflix.
There are a number of other compelling businesses in the portfolio that are among the world's best at what they do, such as Berkshire Hathaway, JPMorgan, Eli Lilly, Visa, Oracle, Mastercard, Walmart, Costco, Walt Disney, Intuitive Surgical and more.
These businesses earn an impressive return on equity (ROE) and continue to have pleasing growth potential, in my view.
Very low management fees
The returns of these companies have been strong, helping the returns of the IVV ETF.
On top of that, the fees of iShares S&P 500 ETF hardly reduce the net returns at all. Its annual management fee is just 0.04%, which is extremely low.
The more of the return that stays in the hands of investors, the better, allowing for stronger compounding of wealth over the long-term.
I think this fund can work very effectively along with a portfolio of ASX shares.
