Some investments are well suited to being bought and held for decades.
For me, exchange-traded funds (ETFs) are a good place to look, particularly when they provide exposure to established businesses with long-term growth potential.
One fund that stands out is the iShares S&P 500 ETF (ASX: IVV).
But is it one of the best ETFs to buy and hold for the long term?
Why I like the IVV ETF
The IVV ETF tracks the S&P 500 Index, giving investors exposure to approximately 500 of the largest companies listed in the United States.
I think that is a strong foundation for a long-term investment. The US market is home to some of the world's most successful businesses, many of which generate revenue from customers across the globe.
This means that although the IVV ETF invests exclusively in US-listed companies, its underlying businesses have exposure to economic growth well beyond America.
I also like the way the S&P 500 evolves over time. Companies that grow and become more important to the US share market can gain greater influence within the index, while those that decline can eventually be replaced.
For investors planning to hold an ETF for 20 or 30 years, I think that is a valuable feature.
The portfolio can change alongside the economy without requiring investors to constantly make decisions about which individual shares to own.
Plenty of growth ahead
Another reason I like the IVV ETF is its exposure to businesses driving major changes across the global economy.
Artificial intelligence (AI) is an obvious example. Major holding NVIDIA has become a major supplier of the technology powering AI development, and the IVV ETF gives investors exposure to its growth.
Investors would also be owning a slice of AI leaders Microsoft, Broadcom, Alphabet, and Meta Platforms.
But I think the longer-term opportunity extends well beyond the companies developing AI infrastructure.
Businesses across healthcare, financial services, manufacturing, and other industries are finding new ways to use technology to improve productivity and expand their operations.
The S&P 500 contains established companies across many of these sectors, which could allow the IVV ETF to benefit from a range of developments over the coming decades.
Low costs make a difference
Another reason I think the iShares S&P 500 ETF suits a buy-and-hold strategy is its low management fee.
The ETF charges just 0.04% annually. This means investors pay only $4 in management fees for every $10,000 invested.
Over several decades, keeping fees low can make a meaningful difference, particularly when investment returns are reinvested and allowed to compound.
As with all investments, there are risks to consider. The IVV ETF is heavily exposed to the US market, with some of its largest technology companies accounting for a significant share of the index.
If these businesses struggle or US shares underperform other markets, returns could disappoint. Currency movements can also affect Australian investors.
Foolish takeaway
I think the IVV ETF is one of the best buy-and-hold options available on the ASX.
It provides exposure to successful global businesses, offers long-term growth potential, and charges very low fees.
For me, it is the kind of ETF I would be happy buying today and continuing to add to over many years.
The post Is the IVV ETF one of the best buy and hold picks? appeared first on The Motley Fool Australia.
Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Broadcom, Meta Platforms, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool Australia has recommended Alphabet, Meta Platforms, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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