Should You Buy iShares S&P 500 ETF (IVV) in May?

The iShares S&P 500 ETF (IVV) has risen 10% since April's low but is down 9% from January. The fund offers diversification through exposure to 500 large US businesses, including Apple, Microsoft, and Amazon. It has a low annual management fee of 0.04% and has a 15.9% average annual return over the past five years. However, it is only invested in US stocks, which may not appeal to all investors, and the new US administration's policies could negatively impact some companies.

The iShares S&P 500 ETF (IVV) has shown resilience in the face of market volatility, rising 10% since its April low but still down 9% from January 2025. This performance reflects the broader market dynamics and the unique characteristics of the fund.

IVV offers diversification through exposure to 500 large US businesses, including tech giants like Apple, Microsoft, and Amazon. This broad-based portfolio helps mitigate risks associated with individual stock performance. The fund's low annual management fee of 0.04% ensures that investors retain a significant portion of their returns, contributing to its historical strong performance. According to BlackRock, the IVV ETF has delivered an average annual return of 15.9% over the past five years [2].

However, IVV's sole focus on US stocks may not be ideal for all investors. The fund's exposure to US companies means it is susceptible to domestic economic policies and geopolitical risks. The new US administration's policies, particularly tariffs, could negatively impact some companies in the portfolio. This uncertainty may deter investors seeking diversification across global markets [2].

Despite these concerns, the fund's long-term prospects remain promising. The companies in the IVV portfolio are known for their strong market positions, robust research and development, and impressive financial health. The global earnings base of these companies reduces their reliance on the US economy, providing a buffer against potential domestic economic downturns.

Investors considering IVV should weigh these factors carefully. While the fund's performance and diversification benefits are clear, the potential risks associated with US-specific exposure should not be overlooked. For those who are comfortable with the risks and the fund's long-term potential, IVV could be an attractive investment option.

References:
[1] https://www.morningstar.com/funds/investors-piled-58-billion-into-us-etfs-despite-aprils-volatility
[2] https://www.fool.com.au/2025/05/12/the-pros-and-cons-of-buying-ishares-sp-500-etf-ivv-this-month/