This investment is one of Warren Buffett's favourite share ideas

Warren Buffett is a big fan of a S&P 500 fund. On the ASX there is one which Aussies can choose called iShares S&P 500 ETF (ASX:IVV).

| More on:

Should you invest $1,000 in Swoop Holdings right now?

Before you buy Swoop Holdings shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Swoop Holdings wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

australian and american flags on boardroom table

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Warren Buffett is one of the wisest investors that the world has ever seen. He has some good advice for a lot of people when it comes to investing: go for an S&P 500 fund.

Mr Buffett has said and done a number of things that show he's a big believer in S&P 500 funds.

He reportedly said to Jack Bogle, founder of Vanguard:

A low-cost index fund is the most sensible equity investment for the great majority of investors. By periodically investing in an index fund, the know-nothing investor can actually out-perform most investment professionals.

My Motley Fool colleague, Keith Speights, also pointed out that over a decade ago Mr Buffett bet $1 million that a S&P 500 fund would outperform a group of hedge funds over a decade. He was right – the S&P 500 fund won by an average of almost 5% per annum to the end of the bet in 2018.

He has also instructed in his will that 90% of his money should be invested in a S&P 500 fund. Fees is an important reason why the S&P 500 fund can outperform expensive managers.

What is iShares S&P 500 ETF?

This investment is an exchange-traded fund (ETF) that tracks the S&P 500 for investors. It's offered by Blackrock, the company behind iShares.

The ETF is domiciled in Australia, which means that there's no need to do US tax forms called W-8BEN forms.

iShares S&P 500 ETF gives exposure to many of the largest and most profitable businesses in the United States. Whilst these businesses are listed in the US, many of them generate earnings from across the world, making them well diversified.

Blackrock says that this investment is good to "use to diversify internationally and seek long-term growth opportunities in your portfolio".

Looking at the iShares S&P 500 ETF's largest holdings, its biggest positions are: Apple, Microsoft, Amazon, Alphabet, Facebook, Tesla, Berkshire Hathaway, JPMorgan Chase and Johnson & Johnson.

As you look further down the list, there are many more recognisable names such as Visa, Walt Disney, Nvidia, Mastercard, PayPal, Procter & Gamble, Home Depot, Bank of America, Intel, Netflix, Exxon Mobil, Adobe and Salesforce. The list of quality names goes on and on.

For Aussies, this is one of the cheapest ETFs that is available on the ASX. It has an annual management fee of just 0.04% per annum. That means almost all of the gross returns become net returns for investors – not much is eaten away in fees.

Over the last decade, iShares S&P 500 ETF has delivered an average net return per annum of 16.4%, which is much stronger than what the S&P/ASX 200 Index (ASX: XJO) has generated because the share prices of the big banks and BHP Group Ltd (ASX: BHP) haven't done much during that time.

One benefit of thinking about the iShares S&P 500 ETF right now is that the Australian dollar is stronger than it has been over the last couple of years compared to the American dollar. Right now, AU$1 is worth US$0.78. This means it's cheaper to buy American assets, like a S&P 500 fund.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended iShares Trust - iShares Core S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ETFs

A man sees some good news on his phone and gives a little cheer.
ETFs

Up 40% in 2025, why this ASX ETF may just be getting started

This ASX ETF has consistently beaten the market.

Read more »

The letters ETF with a man pointing at it.
ETFs

The pros and cons of buying iShares S&P 500 ETF (IVV) this month

Is this leading fund a good buy today?

Read more »

ETF written on wooden blocks with a magnifying glass.
ETFs

2 amazing ASX ETFs I'd buy for market-beating returns

These funds have a lot of potential, in my view.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Share Market News

$10,000 invested in the ASX 200 5 years ago is now worth…

Guess how much $10,000 invested in the ASX 200 five years ago is worth today!

Read more »

ETF written in yellow with a yellow underline and the full word spelt out in white underneath.
ETFs

10 ASX ETFs to buy in May with $10,000

These funds offer investors access to many of the best companies in the world.

Read more »

Businessman working and using Digital Tablet new business project finance investment at coffee cafe.
ETFs

MOAT ETF is up 10% in 2 weeks. Is this ASX ETF still good value?

Let's see if it is too late to buy this popular fund.

Read more »

A group of young people lined up on a wall are happy looking at their laptops and devices as they invest in the latest trendy stock.
ETFs

3 ASX ETFs for beginner investors to buy

Getting started with investing can feel overwhelming — especially if you're not sure which individual stocks to pick or when…

Read more »

Smiling woman holding Australian dollar notes in each hand, symbolising dividends.
ETFs

$10,000 invested in VEU ETF a year ago is now worth…

Worried about US stocks? This ASX ETF allows you to invest everywhere globally whilst avoiding the US.

Read more »