IVV ETF: What You Actually Own for 0.04% a Year
IVV costs $4 a year per $10,000 and has been on the ASX since 2000. What is inside it, how top-heavy it really is, and where it fits next to an Australian fund.
By Timothy Hirou GaschereauPublished 11 min read
IVV is one of the cheapest funds you can buy on the ASX, and the fee is what everybody leads with. It is also the least interesting thing about it. At four dollars per ten thousand, the cost stopped mattering a while ago. What you are actually deciding is how much of your money sits in one country.
This article is general information only, not personal financial advice. It does not recommend this fund. Consider your own circumstances and read the product disclosure statement before investing.
Quick answer
IVV is BlackRock’s iShares S&P 500 ETF, listed on the ASX since 2000. One trade in Australian dollars buys you around 500 of the largest American companies for 0.04% a year. It is Australian domiciled, so no W-8BEN and no direct US estate tax. It is also 100% one country, with no Australia, no emerging markets and no small companies.
In this guide
- →What the fee costs at balances you might actually hold
- →The earnings test a company has to pass to enter the index
- →Why 500 companies is less diversified than it sounds
- →What pairs with it, and who should look elsewhere
🇺🇸 What IVV is, briefly
IVV tracks the S&P 500: the largest listed American companies, weighted by size. You buy it on the ASX in Australian dollars through any ordinary brokerage account, the same way you would buy BHP or CBA.
It is Australian domiciled, which you can confirm from an ISIN starting with AU. That single fact removes the W-8BEN paperwork and the direct US estate tax exposure that some ASX-listed but US-domiciled funds carry. If that distinction is what brought you here, our guide to S&P 500 ETFs in Australia compares the options and goes through the domicile trap in full.
💸 What 0.04% costs in dollars
Percentages are easy to nod along to and hard to feel. Here it is in money.
At half a million dollars invested you are paying about $200 a year. That is genuinely cheap, and it is also why arguing over a couple of basis points between index funds is a distraction. The decisions that move your outcome are which markets you own and whether you keep holding them.
📋 How a company gets into the index
The S&P 500 is not simply the 500 biggest American companies. Entry is decided by a committee against published criteria, which include being US domiciled, listing on an eligible exchange, meeting a minimum size, trading with enough liquidity, and showing positive earnings.
That earnings requirement is the one worth noticing. A loss-making company, however famous, does not qualify on that criterion. It is a quiet quality filter that a pure market-size index would not apply.
⚠️ One country, and a top-heavy one
Five hundred companies sounds like a lot of spreading out. Two things complicate that.
It is entirely American. No Australia, no Europe, no Japan, no emerging markets. If the American market has a poor decade, there is nowhere in this fund that is not having it too.
It is weighted by size. The index counts each company by its freely tradeable market value, so the largest names carry far more influence over the fund’s day to day movement than the smallest. A handful of very large companies, mostly in technology, drive a disproportionate share of what happens.
🎯 The essential: None of this is a flaw in IVV. The fund tracks its index faithfully and cheaply. It is a feature of the index itself, and it is worth understanding before rather than after.
💱 The currency you did not choose
IVV is unhedged. The companies earn in US dollars, you spend Australian dollars, and the exchange rate sits between the two. A falling Australian dollar flatters your returns, a rising one drags on them, entirely separately from how the companies perform.
Some people treat this as a feature, since the Australian dollar has tended to fall when global markets are in trouble, softening the local-currency blow. Others just find it noise. A hedged version of the same index exists if you want the variable gone, at a higher fee. Our hedged versus unhedged guide works through that choice properly.
🧩 What to put next to it
IVV is a building block rather than a portfolio. The usual companion is an Australian shares fund, for three reasons that are worth stating plainly.
| IVV | An Australian shares fund | |
|---|---|---|
| Franking credits | None, the companies are American | Yes, on franked dividends |
| Currency | Exposed to AUD/USD | The currency you spend |
| Typical profile | Growth-leaning | Historically higher yielding |
There is no correct ratio. Some people run 70% international and 30% Australian, others reverse it. If you want the rest of the developed world in the mix rather than the US alone, that is the argument covered in IVV vs VGS.
🚫 Who IVV does not suit
- You want the world, not America. This is one country by design. A global fund is the tool for that job.
- Currency swings bother you. Unhedged means the exchange rate is part of your return whether you thought about it or not.
- You need income. American companies lean towards buybacks rather than dividends, and there are no franking credits here.
- You want smaller companies. The S&P 500 is large caps. Mid and small American companies sit outside it.
- A deep fall would make you sell. This is a share fund and it will have bad years. The cheapest fund in the world does not help if you do not hold it through them.
❓ Frequently asked questions
What does IVV cost?+
0.04% a year, which is $4 on every $10,000 held. It is among the cheapest funds on the ASX. At that level the fee is genuinely not the interesting part of the decision, and anyone choosing between low cost index funds on a few basis points is usually optimising the wrong variable.
Do I need a W-8BEN form for IVV?+
No. IVV is Australian domiciled, which you can see from its ISIN beginning with AU, so you hold units in an Australian fund rather than US securities directly. That means no W-8BEN and no direct US estate tax exposure on the holding. This trips people up because some ASX-listed funds are US domiciled underneath, which is a different situation entirely.
How long has IVV been listed?+
Since 2000, which makes it one of the longer-running ETFs on the ASX. That history covers the dot com unwind, the global financial crisis and the 2020 crash. A long record does not predict returns, but it does mean the fund has been tested through more than one kind of market.
Is IVV enough on its own?+
It depends what you want it to be. It is 500 large American companies and nothing else: no Australia, no Europe, no Japan, no emerging markets, and no small companies. Plenty of people hold it as their only international fund, but as an entire portfolio it is a concentrated position in one country.
Is IVV hedged against currency moves?+
No, IVV is unhedged, so the AUD to USD exchange rate affects your returns in Australian dollar terms. A falling Australian dollar helps, a rising one hurts. There is a hedged version of the same index available if you want that variable removed, at a higher fee.
How does IVV compare with VGS?+
IVV is cheaper and narrower: 0.04% for one country. VGS charges 0.18% for the developed world, though it is 73.32% United States anyway, so the two overlap more than the labels suggest. The real question is not the fee gap but whether you want the remaining quarter of the world in your portfolio.
🔗 Sources
- IVV listing data, Australian Securities Exchange, showing the 0.04% management fee and the AU domiciled ISIN.
- iShares Core S&P 500 ETF (IVV), BlackRock Australia.
- Exchange traded funds, Moneysmart, Australian Securities and Investments Commission.
- Diversification, Moneysmart, Australian Securities and Investments Commission.
📚 Recommended reading
The Little Book of Common Sense Investing
John C. Bogle
The Little Book of Common Sense Investing
From the man who invented the index fund, this is the short, sharp case for low-cost investing that has aged like fine wine. The maths on fees is universal, just think ETFs and super instead of his US funds.
The Bogleheads' Guide to Investing
Taylor Larimore, Mel Lindauer & Michael LeBoeuf
The Bogleheads' Guide to Investing
The friendly community bible of low-cost, buy-and-hold index investing, written by everyday investors rather than salespeople. The core philosophy is timeless for Aussies, just read the tax-advantaged account bits as super.
Some links above are affiliate links. If you buy through them, Snowball Invest may earn a small commission at no extra cost to you. We only recommend books we'd suggest anyway.
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Explore the calculators →General information only. This article is educational and does not constitute personal financial advice. It does not account for your circumstances. Consider your own situation and seek advice from a licensed adviser before acting. Read our full disclaimer.
Timothy Hirou Gaschereau
Founder of Snowball Invest, not a financial adviser.
I write about what I'm learning myself, because nobody ever taught us how to take control of our own money. It's a skill, not a mystery, and it's never too late to learn it. The best day to start was yesterday, the second best is today.
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