iShares Core S&P500 ETF (ASX:IVV)
The USA, a larger-than-life nation where dreams and fortunes have been made and are still made today. It is home to some of the biggest companies, stock markets and stock indices on the planet.
One of the most widely followed indices globally that is used to gauge the performance of the US stock market is the Standard and Poor’s 500 Index, otherwise known as the S&P500 Index. IVV is an ETF quoted in Australia that tracks the performance of this index.
What is an ETF?
An ETF is a Fund that is traded on an exchange – an Exchange Traded Fund (ETF). At Raiz we invest in ETFs quoted on the ASX, the biggest stock exchange in Australia. Read our ETF blog here to help get you up to speed.
What is the IVV ETF?
The IVV ETF is an Australian listed ETF issued by iShares that tracks the performance of the S&P500 Index, featuring many of the 500 biggest companies in the USA. iShares is owned by BlackRock, the world’s largest ETF issuer. Think Apple, Microsoft, Meta, Tesla. It’s a long and prestigious list of many globally recognisable brands that you can track with one single ETF.
You can view the US quoted IVV factsheet here and the Australian quoted ETF here.
Some interesting facts about the S&P500 Index
- Although there are 500 companies making up the index, as of December 31st, 2021, there are actually 508 listings in the S&P500, not 500 as some may expect. This is because companies such as Alphabet have issued multiple classes of shares.
- It is one of the most tracked indices worldwide, with more than US$5.4 Trillion invested assets tied to the performance of the index, including the IVV ETF! The ETF industry is now US$10 Trillion. That’s big.
- As of January 12th, 2022, the top 5 companies accounted for 20.6% of the value of the entire index. These companies are listed below.
- To join the S&P500 Index, a stock must meet a broad set of criteria, including having a total market value of at least $11.8 billion as of the end of 2021, and have had four consecutive quarters of profit. Companies that deviate from the criteria set may be removed from the S&P500 Index, which rebalances quarterly.
Top 20 Stocks in the IVV ETF (as of Jan 12th, 2022)
Sector breakdown of IVV (as of Jan 12th, 2022)
How can I own an ETF if the index is based in the US?
The issuer, iShares, buys the correct proportions of the shares to represent the S&P500 Index, but the ETF is quoted and traded here in Australia on the ASX. ETFs at Raiz like IVV can enable you to have exposure to markets across the world. This is not currency hedged so is exposed to US Dollar movements against the Australian Dollar.
Does the ETF move if the S&P500 Index moves?
During ASX opening hours, the movement in the IVV ETF should approximately correspond to the movement in S&P500 futures that trade almost 24 hours a day. The physical stocks that make up the S&P500 Index are actually closed on the main US exchanges when IVV in Australia is open because of the time difference, but the S&P500 futures provide a good indicator of where the S&P500 Index is being valued by investors in real time.
There is no currency hedging. So if the S&P500 index rises 1% but the AUD rises 1% the change in value of IVV will be close to 0%. But this also means that the value of IVV can rise if the AUD falls.
The good news?
IVV is available in seven of the Raiz Portfolios – just not in Emerald Portfolio.
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