Should I Buy the iShares S&P 500 ETF (IVV) Despite Recent Volatility?

The iShares S&P 500 ETF (IVV) is a popular exchange-traded fund that allows investors to invest in 500 US-listed businesses. The fund's unit price has fallen 3% since January 2025, making it a potentially attractive investment opportunity. The ETF offers exposure to well-established companies with strong earnings growth and has delivered a 16% average annual return over the last decade. However, its price/earnings ratio has risen, and investors should be aware of the risks associated with a high P/E ratio and the fund's heavy focus on the US market.

The iShares S&P 500 ETF (IVV) has experienced a 3% decline in its unit price since the beginning of 2025 [1]. This dip, while noteworthy, may present an attractive investment opportunity for those seeking exposure to well-established US-listed companies with strong earnings growth. Over the past decade, IVV has delivered an impressive average annual return of 16% [1].

However, it's essential to acknowledge the potential risks associated with this ETF. First, the fund's price-to-earnings (P/E) ratio has risen, which could indicate an overvalued stock market [2]. A high P/E ratio does not necessarily imply that a stock is overpriced, but it can increase the risk of potential losses if the market experiences a downturn.

Moreover, IVV's heavy focus on the US market may expose investors to additional risks. While the US economy is robust, diversifying investments across different geographies and markets can help mitigate potential risks.

Despite these risks, IVV's strong earnings growth and solid track record make it an appealing choice for investors seeking exposure to the US market. As of January 2025, the ETF's top 10 holdings include well-established companies like Microsoft, Apple, and Amazon, which have shown resilience and growth in the face of economic uncertainty [1].

It's essential for investors to conduct thorough research and consider their investment objectives, risk tolerance, and market conditions before investing in IVV or any other ETF. Additionally, investors should be aware of the ETF's sustainability characteristics and investment strategy, which can impact its potential returns and risks [1].

References:

[1] iShares. (2025). IVV IS NOW ELIGIBLE FOR VOTING CHOICE. Retrieved from https://www.ishares.com/us/products/239726/ishares-core-sp-500-etf
[2] Morningstar. (2025). IVV Quote. Retrieved from https://www.morningstar.com/etfs/arcx/ivv/quote