The iShares S&P 500 ETF (ASX: IVV) continues to attract long-term investors despite recent market fluctuations. Over the past decade, it has consistently been one of the highest-performing exchange-traded funds (ETFs), offering substantial exposure to the S&P 500, which includes 500 of the largest and most profitable companies in the United States. As of August 31, 2025, the fund has delivered an impressive average net return of 15.3% per year, a figure that many fund managers would find enviable.
While past performance does not guarantee future results, several factors suggest that the IVV ETF could still be a solid investment choice for the long term.
Interest Rates and Economic Outlook
Interest rates play a crucial role in shaping how investors value the companies within the IVV ETF. Following a period of rising rates aimed at controlling inflation, there are signs that the Federal Reserve is now shifting its approach. In a recent move, the Federal Reserve cut the Federal Funds Rate by 25 basis points, bringing it to a range between 4% and 4.25%. Analysts anticipate further reductions in the coming year.
Lower interest rates can provide a significant boost to asset prices, effectively acting like a gravitational force. If rates continue to decline, this trend could serve as a powerful catalyst for share prices, enhancing the overall performance of the ETF.
Robust Company Performance
The companies included in the IVV ETF portfolio are among the best-performing businesses globally. They have shown exceptional growth and are actively investing in innovative sectors such as artificial intelligence, cloud computing, e-commerce, and online advertising. Major players like Nvidia, Microsoft, Apple, Amazon, Meta Platforms, and Tesla drive this growth, reflecting a strong commitment to future success.
Additionally, other notable companies in the ETF—such as Berkshire Hathaway, JPMorgan Chase, Visa, and Walmart—demonstrate impressive return on equity (ROE) and considerable long-term growth potential. This diverse portfolio positions the ETF well for continued success.
Low Management Fees Enhance Returns
Another compelling reason to consider the iShares S&P 500 ETF is its remarkably low annual management fee of just 0.04%. This minimal fee structure ensures that a larger portion of returns remains with investors, promoting stronger wealth compounding over time. The combination of solid company performance and low costs makes the IVV ETF a potentially effective addition to a diversified investment portfolio.
Before making any investment decisions, individuals should carefully evaluate their options. While the iShares S&P 500 ETF presents a strong case for long-term investment, financial experts like Scott Phillips from Motley Fool caution that there may be other stocks currently offering better opportunities. Investors are encouraged to conduct thorough research or consult with a financial advisor before proceeding.
In summary, the iShares S&P 500 ETF stands out as a reliable choice for those looking to invest for the long haul. With falling interest rates, a portfolio of exceptional companies, and low management fees, the IVV ETF remains a compelling option for growth-oriented investors.
