3 reasons to buy and hold the IVV ETF forever

The iShares S&P 500 ETF (ASX: IVV) is a very popular option and it isn’t hard to see why.

It is one of the simplest ways for Australian investors to access the US share market.

Rather than trying to pick individual American stocks, this exchange traded fund (ETF) gives investors exposure to the S&P 500 index through a single trade.

Here are three reasons why it could be worth buying and holding for the long term.

IVV ETF provides exposure to world-class companies

The first reason to consider the fund is the quality of the businesses inside the fund.

The S&P 500 is home to many of the largest and most influential companies in the world. These are businesses with global brands, deep customer bases, strong balance sheets, and major positions in their industries.

Its holdings include names such as Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Berkshire Hathaway (NYSE: BRK.B).

This gives investors access to companies across technology, healthcare, financials, industrials, consumer goods, and more. It is not a bet on one sector or one theme. It is exposure to a broad group of companies that help drive the US economy.

For investors wanting simple global exposure, it remains one of the cleanest options on the ASX.

It has a strong long-term track record

Another reason to buy and hold the iShares S&P 500 ETF is the long-term performance of the market it tracks.

The S&P 500 index has delivered an average annual return of around 10% over the past century. That period has included wars, recessions, inflation shocks, market crashes, banking crises, and a global pandemic.

Despite all of that, the index has continued to rise over time.

This does not mean returns will be smooth. They never are. There will be periods when the IVV ETF falls sharply, sometimes for months or even years.

But the long-term lesson is clear. Investors who stay invested through difficult periods have historically been rewarded for their patience.

That makes the fund a strong option for those who want to benefit from long-term compounding without constantly trading in and out of the market.

It keeps investing simple

A third reason to like the IVV ETF is its simplicity.

Investing can quickly become complicated when trying to choose individual shares, time the market, or respond to every piece of economic news.

This ASX ETF removes a lot of that pressure. It gives investors diversified exposure to 500 large US companies in a single investment.

That can make it easier to stay consistent. Investors can add to the fund over time, reinvest distributions, and let the underlying companies do the work.

The low-cost structure also helps. Over long periods, keeping fees down can make a meaningful difference to total returns.

For investors who want a straightforward way to build wealth over time, the iShares S&P 500 ETF has plenty of appeal as a long-term holding.

The post 3 reasons to buy and hold the IVV ETF forever appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Berkshire Hathaway, Microsoft, and iShares S&P 500 ETF. The Motley Fool Australia has recommended Apple, Berkshire Hathaway, Microsoft, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.