IShares Core S&P 500 ETF IVV offers a well-diversified, market-cap-weighted portfolio of 500 of the largest US stocks. It accurately represents the large-cap opportunity set while charging a rock-bottom fee, a recipe for success over the long run.
The exchange-traded fund tracks the flagship S&P 500, which selects 500 of the largest US stocks—roughly 80% of the US equity market—and weights them by market cap. An index committee has discretion over selecting companies that meet certain liquidity and profitability standards. While a committee-based approach may lack clarity, it adds flexibility to reduce unnecessary changes during reconstitution, taming transaction costs compared with more-rigid rules-based indexes.
The end portfolio is well-diversified and accurately resembles the US large-cap opportunity set. This allows the ETF to capitalize on its low fee, ultimately delivering sound long-term performance on both an absolute and risk-adjusted basis.
The bedrock of this ETF is market-cap weighting, which harnesses the market’s collective wisdom of the relative value of each holding with the added benefit of low turnover and associated trading costs. It’s a sensible approach because the market tends to do a good job pricing large-cap stocks. The companies in this portfolio attract liquidity and widespread investor attention, such that prices reflect new information quickly.
However, when few richly valued companies or sectors power most of the market gains, market-cap weighting may expose the ETF to stock- or sector-level concentration risk. As of December 2023, the top 10 holdings made up the largest portion of the index (31%) in several decades and the 30% allocation to technology stocks was the highest since the dot-com bubble. But this is not a fault in design: The S&P 500 simply reflects the market composition. In the long run, its broad diversification, low turnover, and a low fee outweigh these risks.
iShares Core S&P 500 ETF: Performance Highlights
This ETF accurately represents the US large-cap opportunity set, allowing it to leverage its cost advantage and drive sound category-relative performance. These qualities position the ETF for outperformance against US large-cap peers over the long run.
The ETF’s performance closely follows the ups and downs of the US stock market, since it is always invested. All else equal, this ETF should outperform its peers that hold cash during market rallies. Likewise, the ETF should lag similar peers when the market falls because it lacks the cash buffer sported by its peers.
The ETF misses out when small-cap stocks outperform large-cap stocks, as they did in the fourth quarter of 2020, because it focuses on the largest and the most established companies. The S&P 500 lagged the Morningstar US Market Index (which includes large-, mid-, and small-cap stocks) by 2 percentage points over the fourth quarter of 2020. Likewise, the ETF can become top-heavy during periods of consolidation among top US companies. This exposes the portfolio to US market risks should another dot-com-type bubble burst, during which the S&P 500 fell over 40% in the early 2000s.
The author or authors do not own shares in any securities mentioned in this article.Find out about Morningstar’s editorial policies.
Schwab's S&P 500 index fund seeks to track the total return of the S&P 500 Index. The fund generally invests at least 80% of its net assets (including, for this purpose, any borrowings for investment purposes) in these stocks. The actual percentage is typically considerably higher.
These funds hold large portfolios of individual stocks, but trade under a single ticker symbol, allowing investors to easily gain exposure to dozens or hundreds of stocks. Which ETF is the best? That's a tough question, but the Vanguard S&P 500 ETF (VOO 0.29%) has a rock-solid argument for being at the top of the list.
Vanguard 500 Index Fund seeks to track the investment performance of the Standard & Poor's 500 Index, an unmanaged benchmark representing U.S. large-capitalization stocks.
Consider looking for S&P 500 index funds with low expense ratios, several years of operation and a healthy amount of assets under management (AUM). The longer a fund has existed, the more information you have about its performance history.
The Bottom Line. Both index mutual funds and ETFs can provide investors with broad, diversified exposure to the stock market, making them good long-term investments suitable for most investors. ETFs may be more accessible and easier to trade for retail investors because they trade like shares of stock on exchanges.
ProShares Short S&P500 seeks daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of the S&P 500®.
Fidelity® 500 Index Fund is a diversified domestic large-cap equity strategy that seeks to closely track the returns and characteristics of the S&P 500® index. The S&P 500® is a market-capitalization-weighted index designed to measure the performance of 500 large-cap U.S. companies.
The Vanguard High-Yield Corporate Fund is the company's top performing bond fund over the past decade. It features a high-yield, intermediate-term fixed income portfolio.
The Vanguard S&P 500 ETF (VOO 0.08%) is one of the best ways to invest in the S&P 500, which has been a pretty smart strategy over the long term. Since 1965, the S&P 500 has produced a total return of 10.2% annualized. The Vanguard ETF has an expense ratio of just 0.03%, so you get to keep most of your gains.
In the past year, QQQ returned a total of 30.38%, which is higher than VOO's 27.99% return. Over the past 10 years, QQQ has had annualized average returns of 18.30% , compared to 12.63% for VOO. These numbers are adjusted for stock splits and include dividends.
Vanguard S&P offers a lower expense ratio (0.035%) than SPY (0.095%), which means lower costs for investors and potentially higher net returns over the long term. VOO might be the more economical choice for cost-conscious investors, especially those investing large sums or planning for long-term goals like retirement.
ICICI Prudential Nifty 50 Index Fund-Growth is among India's top 10 index funds. It falls within the Large Cap Index category. Over the past year, ICICI Prudential Nifty 50 Index Fund-Growth has returned 15.09 percent. Since its inception, it has delivered an average annual return of 14.74 percent.
The historical average yearly return of the S&P 500 is 12.58% over the last 10 years, as of the end of April 2024. This assumes dividends are reinvested. Adjusted for inflation, the 10-year average stock market return (including dividends) is 9.52%.
Introduction: My name is Francesca Jacobs Ret, I am a innocent, super, beautiful, charming, lucky, gentle, clever person who loves writing and wants to share my knowledge and understanding with you.
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