What IVV actually is

IVV is BlackRock’s iShares fund that follows the S&P 500, the index of roughly 500 of the largest companies in the United States. It is part of the “iShares Core” range, the group of funds meant to be the building blocks of a long-term portfolio.

iShares began as a family of ETFs created by Barclays, which started a major push into the market in 2000. BlackRock bought the business in 2009, and iShares is now the largest ETF provider in the US and in the world.

How it works

IVV holds the stocks in the index in about the same proportions as the index itself, so its return should closely match the S&P 500 before fees. There is no stock picking and little trading, which keeps costs down.

Unlike SPY, IVV is an open-ended fund. That gives it more flexibility, for example in reinvesting dividends received between payment dates and lending securities.

Costs and distributions

IVV, VOO and SPY all hold the S&P 500, so what separates them is mostly cost, structure and what your broker offers. Compare the current expense ratios on the issuers’ websites before you choose.

The fund pays distributions quarterly, made up of dividends from the underlying companies. The yield is generally low because many of the biggest S&P 500 companies pay small dividends or none at all.

What to keep in mind

  • Concentration. A small number of very large companies hold a big share of the fund.
  • US-only. You get no direct exposure to international markets.
  • Not an income fund. If you want a higher yield, a dedicated dividend fund may fit better.

Quick take

IVV is a simple way to own the US stock market’s biggest companies. It is interchangeable with VOO for most investors.