Is IVV a Good Investment

Is IVV A Good Long Term Investment

So, is iShares Core S&P 500 ETF a solid choice for building long-term wealth?

IVV tracks the S&P 500, giving investors exposure to 500 of the largest US companies through a single low-cost ETF managed by BlackRock.

Over the past decade, IVV has delivered strong double-digit average returns, reflecting the growth of global leaders like Apple, Microsoft, and Nvidia. While past performance doesn’t guarantee future results, the fund’s broad diversification and low fees make it a popular choice for long-term investors.

IVV offers:

• Exposure to top US companies
• Broad diversification across sectors
• Potential for long-term capital growth

That said, returns can fluctuate, especially during market downturns. Investors should expect volatility and take a long-term view rather than focusing on short-term price movements.

What Is IVV and How Does It Work?

So, what exactly is IVV? Essentially, the iShares Core S&P 500 ETF (IVV) is a way to invest in the 500 biggest companies listed on the US stock market, all in one go. Think of it as a basket holding shares of these major players, from tech giants to established industrial companies. It’s managed by BlackRock, a big name in the investment world, and its main goal is to track the performance of the S&P 500 Index. This index is a widely recognised benchmark for the US stock market, representing about 80% of the total market value of US-listed shares.

How does it actually work? IVV is what’s called an ‘index fund’. Instead of trying to pick individual winning stocks, it simply aims to replicate the S&P 500 index. This means if a company is in the S&P 500, there’s a good chance it’s in IVV. The fund buys and holds shares of these companies in roughly the same proportions as they appear in the index. This approach is often called ‘passive investing’ because it’s not actively managed by someone trying to beat the market. It’s more about following the market’s overall direction.

Here’s a quick rundown of how it operates:

• Tracking the Index: IVV’s primary job is to mirror the S&P 500 Index’s movements. If the index goes up, IVV generally goes up, and vice versa.
• Diversification: By holding shares in 500 different companies, IVV offers instant diversification. This spreads your investment across various industries and reduces the risk associated with any single company performing poorly.
• Low Costs: A big drawcard for IVV is its very low expense ratio, often around 0.03%. This means more of your investment money stays working for you, rather than being eaten up by fees. This is a pretty significant advantage over the long haul.
• Accessibility: It’s listed on the stock exchange, making it easy to buy and sell through a standard brokerage account, just like any other share. This makes getting exposure to the US market straightforward.

The structure of IVV means its performance is closely tied to the health and growth of the largest US corporations. While this offers broad market exposure, it also means that significant downturns in the US economy or specific large sectors can heavily influence the ETF’s value.

For example, as of late 2025, the Information Technology sector often made up a substantial portion of the fund, sometimes over 30%. This highlights how the fund’s performance can be influenced by the fortunes of major tech companies. You can find out more about how to buy this type of ETF in Australia here.

IVV Historical Performance and Average Returns

When we look at how IVV has performed over the years, it’s pretty interesting stuff. This ETF aims to mirror the S&P 500 index, so its returns generally track what the big US companies are doing. Over the last decade, for instance, IVV has shown some really strong average annual returns. We’re talking about figures that have often been in the double digits, which is quite something.

For example, looking at the ten years leading up to late 2025, the fund delivered an average net return of around 15.3% per year. That’s a pretty solid number that most investors would be happy with. Even going back further, since its inception around the year 2000, the average annual total return has been about 8.14%. It’s important to remember that past performance isn’t a crystal ball for the future, but it does give you a good idea of what’s been possible.

Here’s a quick look at some of the average returns:

• 1 Year: Around 17.57%
• 3 Years: Around 24.90%
• 5 Years: Around 16.43%
• 10 Years: Around 15.26%

These numbers include both the increase in the ETF’s price and any dividends paid out. It’s this combination, especially when dividends are reinvested, that really helps your investment grow over time. The performance of IVV is very closely aligned with the S&P 500 itself, usually differing by no more than a tiny fraction.

Investing in something like IVV means you’re essentially betting on the continued growth of the US economy and its biggest companies. While there have been ups and downs, like a 22% drop in 2022 followed by strong rebounds, the long-term trend has generally been upwards. Patience is key here.

It’s worth noting that the tech sector often makes up a significant portion of the S&P 500, so big moves in tech can really influence IVV’s performance. If you’re looking for exposure to these large US businesses, IVV tracks the index and offers a straightforward way to do it. The fund’s performance is a testament to the strength of these companies over time, though future returns might not always match the exceptional highs of the past decade.

Risks of Investing in IVV Long Term

While IVV has a solid track record, it’s not all smooth sailing. Like any investment tied to the stock market, there are definitely risks to keep in mind, especially if you’re planning to hold onto it for years.

One of the main things to consider is market risk. Because IVV tracks the S&P 500 so closely, it’s going to go up and down with the broader US stock market. If the economy hits a rough patch, say with a recession or some big global event causing uncertainty, IVV will likely take a hit too. It doesn’t really have a way to avoid those general market downturns.

Then there’s volatility. Even though IVV holds a bunch of different companies, it’s still an ETF based on stocks. This means its value can swing around quite a bit day-to-day. We’ve seen periods, like during the 2008 financial crisis, where the S&P 500 dropped by more than half, and IVV went down sharply with it. So, while it’s generally stable over the long haul, expect some bumpy rides along the way.

Another point is sector concentration. The S&P 500 isn’t spread out evenly across all industries. A big chunk of the index, and therefore IVV, is in the technology sector. Think companies like Microsoft, Apple, and Nvidia. If the tech sector itself faces a major downturn, it could really drag IVV down more than other ETFs that might be more balanced across different industries. This concentration means that any big problems in tech can have a larger impact on your investment.

Here are a few key risks to remember:

• Market Fluctuations: IVV’s performance is directly tied to the S&P 500, so it’s exposed to overall market ups and downs.
• Sector Concentration: A significant portion of the ETF is invested in technology stocks, making it vulnerable to sector-specific downturns.
• Economic Uncertainty: Global events, interest rate changes, or recessions can negatively impact the value of your investment.

Investing in IVV means you’re essentially betting on the continued growth and resilience of the largest US companies. While historically this has paid off, it’s important to acknowledge that past performance doesn’t guarantee future results. Economic shifts and unforeseen events can always alter the investment landscape, so staying informed and having a long-term perspective is key.

Does IVV Pay Dividends

So, does IVV pay dividends? Yes, it does. The iShares Core S&P 500 ETF (IVV) distributes dividends to its shareholders on a quarterly basis. You can expect to see these payments typically in March, June, September, and December.

IVV ASX Dividend History

When we look at the dividend history for IVV, it’s important to set expectations. The dividend yield for the trailing 12 months ending in late 2025 was around 1.16%. Now, that’s not a massive yield, and it’s generally not the main reason people invest in IVV. Most investors are drawn to this ETF for its potential for long-term capital growth, aiming to mirror the performance of the S&P 500 index. If you’re chasing high dividend income, you might find other ETFs that focus specifically on dividends offer higher yields, often above 2%.

However, these dividends do add up over time, especially when reinvested. They represent a portion of the profits from the underlying companies being passed back to you as an investor.

While the dividend yield might seem modest, it’s a consistent part of the total return from holding IVV. For long-term investors, reinvesting these dividends can significantly boost your overall returns through the power of compounding.

Here’s a general idea of what to expect:

• Frequency: Quarterly payments.
• Timing: Usually in March, June, September, and December.
• Yield: Historically around 1.16% (based on trailing 12 months to late 2025), which is considered relatively low but contributes to the overall return.

It’s worth noting that the specific dividend amount can fluctuate based on the performance of the companies within the S&P 500 index. The fund aims to track the index, so dividend payments will reflect the distributions made by those 500 large-cap US companies. For the most up-to-date figures, checking the latest product disclosure statement or financial reports from the fund manager is always a good idea. You can find details on the fund’s Net Asset Value and management fees on pages like this BlackRock product information.

Ultimately, while IVV isn’t primarily a dividend-focused investment, the regular dividend payments are a nice bonus that contributes to the total return over the long haul.

Is IVV Good for Beginners?

So, you’re thinking about dipping your toes into investing and wondering if IVV is a good starting point? Honestly, for a lot of people just starting out, it can be a pretty sensible choice. Think of IVV as a way to own a tiny piece of 500 of the biggest companies in the United States, all in one go. It’s like buying a pre-made basket of well-known businesses, rather than trying to pick individual winners yourself.

For beginners, the main draw is simplicity. You don’t need to spend hours researching individual stocks. IVV just follows the S&P 500 index, which is basically a snapshot of the US economy’s big players. This means you get instant diversification, which is a fancy way of saying you’re not putting all your eggs in one basket. If one company stumbles, it doesn’t usually tank your whole investment.

Of course, it’s not all sunshine and rainbows. The market can go down, and when it does, IVV will go down too. It’s important to remember that investing always comes with some risk.

Investing in something like IVV means you’re essentially betting on the overall growth of the US economy over the long haul. It’s a strategy that relies on patience and a belief that, despite short-term wobbles, the big companies will continue to grow and generate returns over many years.

If you’re looking for a straightforward way to get broad exposure to the US stock market without needing to be an expert stock picker, IVV is definitely worth considering as part of your investment journey.

IVV vs Other S&P 500 ETFs in Australia

So, you’re looking at IVV, the iShares S&P 500 ETF, and wondering how it stacks up against other ways to get your hands on the S&P 500 index here in Australia. It’s a fair question, especially when you’re trying to make your money work for you long-term.

When we talk about S&P 500 ETFs available on the ASX, we’re generally looking at funds that track the same big list of 500 US companies. This means the core investments are pretty similar across the board. However, the devil is often in the details, like management fees, how the ETF is structured (e.g., physically replicated or synthetically), and the specific provider.

Here’s a quick look at some common alternatives you might see:

• Vanguard ETF (VGS): While VGS tracks the broader MSCI World Index, which includes the S&P 500 but also companies from other developed countries, it’s often compared for its broad international exposure and low fees. If you’re after pure US large-cap exposure, IVV is more direct.
• BetaShares Australia 200 ETF (A200): This one tracks the ASX 200, so it’s Australian companies, not US. It’s a different ballgame entirely, but worth mentioning if you’re considering diversifying across different markets.
• Other S&P 500 Trackers: You might find other ETFs that also aim to replicate the S&P 500 index. The key differences usually boil down to their expense ratios (how much they charge annually) and their size (assets under management). A larger ETF might offer a bit more liquidity, but for most retail investors, this isn’t a major concern.

When comparing IVV to other direct S&P 500 ETFs, the expense ratio is often the most significant differentiator. IVV typically has a competitive fee, but it’s always wise to check the latest figures. A small difference in fees, compounded over many years, can add up.

The core idea behind these ETFs is to give you a slice of the biggest companies in the US economy. They’re designed to be simple, low-cost ways to get that exposure, and for the most part, they do a pretty good job of it. The main differences you’ll find are in the nitty-gritty costs and the specific way they track the index.

Ultimately, while the underlying index is the same, the specific ETF you choose can have a small impact on your net returns due to fees and how the fund is managed. It’s about finding the one that best fits your investment strategy and cost tolerance.

How To Buy IVV ETF In Australia

So, you’ve decided IVV looks like a good fit for your investment plans. Great! Buying it here in Australia is pretty straightforward, mostly done through a regular brokerage account. Think of it like buying shares in any other company on the Australian Securities Exchange (ASX).

Here’s a simple rundown of how you’d go about it:

1. Open or Log In to Your Brokerage Account: If you don’t already have one, you’ll need to open an investment account with an Australian online broker. Plenty of options are out there, each with different features and fees. Once you’re set up, just log in.
2. Search for the ETF: In your broker’s platform, look for the ticker symbol ‘IVV’. You can also search by its full name, iShares S&P 500 ETF. It’s listed on the ASX, so it’ll be easy to find.
3. Decide How Much to Invest: Figure out how many units of IVV you want to buy. This depends on your investment goals and how much you’ve allocated to this particular investment. You can buy whole units or, depending on your broker, sometimes fractions.
4. Place Your Order: You’ll need to choose an order type. A ‘market order’ buys at the current best available price, while a ‘limit order’ lets you set a maximum price you’re willing to pay. Once you’ve decided, submit your order.
5. Check Your Holdings: After your order is processed, you should see IVV in your investment portfolio. It’s always a good idea to double-check that everything went through as expected and fits into your overall investment strategy.

It’s worth noting that IVV tracks the S&P 500 index, which is made up of 500 of the largest US companies. This means you’re getting exposure to some pretty big names in the global economy, like Apple, Microsoft, and Amazon, all through a single investment. This diversification is a big part of why ETFs like IVV are popular. You can explore a range of iShares ETFs designed to build out your portfolio here.

Investing in ETFs like IVV means you’re essentially buying a small piece of many different companies at once. This spreads out your risk compared to picking individual stocks. While you still need to consider the overall market movements and the performance of the US economy, it’s a more hands-off approach for many investors looking for long-term growth.

Remember, before you invest, it’s always wise to do your own research or chat with a financial advisor to make sure it aligns with your personal financial situation and goals. Happy investing!

Frequently Asked Questions

Is IVV hedged against currency risk?

No. IVV is unhedged, so Australian investors are exposed to AUD/USD movements. If the US dollar rises, returns can increase — if it falls, returns may be reduced.

What is the minimum investment for IVV in Australia?

There’s no official minimum. You simply buy at the current unit price on the Australian Securities Exchange, plus your broker’s minimum trade amount (often around $500).

Can I reinvest IVV dividends automatically?

Yes, many Australian brokers offer a Dividend Reinvestment Plan (DRP), letting you automatically reinvest IVV dividends into more units.

Is IVV better for lump sum or dollar-cost averaging?

Both work. A lump sum can perform better in rising markets, while dollar-cost averaging helps reduce timing risk and smooth volatility.

Is IVV suitable for retirement portfolios?

Yes, IVV is commonly used for long-term growth in retirement portfolios, especially when combined with more defensive assets like bonds or cash.

How is IVV taxed in Australia?

Dividends are taxed as income, and capital gains apply when you sell. Because IVV holds US shares, a small amount of US withholding tax may also apply.