6 Best S&P 500 ETFs on the ASX for Australians 2024

In today's globalised investment landscape, Australian investors are increasingly turning their attention to the US stock market. The S&P 500 Index is one of the most important benchmarks for US equities, offering a diverse range of investment opportunities in leading companies across a wide range of industries. For Australian investors looking to capitalise on this lucrative opportunity without the hassle of stock-picking, the S&P 500 Index ETF listed on the Australian Securities Exchange (ASX) offers a convenient and cost-effective solution.

This guide is designed to help Australian investors navigate the S&P 500 Index ETF options available on the ASX, focusing on the top S&P 500 Index ETFs that stand out in Australia, and providing investors with the knowledge they need to make informed decisions about their portfolios by identifying the well performing ETFs based on criteria such as fees, tracking accuracy, liquidity and overall performance.

How to choose the best S&P 500 ETF?

As an investor, it is crucial to make sure that you are making profit by investing in the most suitable S&P 500 ETFs. This choice should align with your financial objectives, level of risk tolerance, and preferred investment time frame. Below we explore the aspects to bear in mind when selecting the top S&P 500 ETF available in Australia, which can assist in making a well-informed decision.

Key factors to consider

The ETF's management fees, historical performance, and asset size are all major considerations.

• Fees ratio: The expense ratio is one of the most significant factors to consider when selecting the best S&P 500 ETF in Australia for you. A lower fee ratio means more of your investment returns stay in your pocket rather than going towards management fees. Look for ETFs with competitive fees to maximise your long-term returns.

• Tracking error: In the quest for the best S&P 500 ETFs available in Australia, pinpoint those displaying minimal tracking error, a metric that signifies the precision with which an ETF mirrors the S&P 500's performance. A lower tracking error assures investors that the ETF is a faithful representative of the index, thereby delivering the anticipated returns.

• Management asset scale: The size of the assets under management (AUM) is another critical factor. Larger ETFs often have better liquidity and lower tracking errors due to economies of scale. Opt for the top S&P 500 ETFs in Australia with substantial AUM to ensure stability and reliability.

• Performance history and consistency: While past performance is not indicative of future results, a consistent performance history can provide insights into how an ETF has navigated different market conditions. Look for ETFs that have demonstrated resilience and growth over various economic cycles.

Personalising your choice

When choosing the top S&P 500 ETFs, it’s important to consider your personal investment profile.

• Risk tolerance: If you have a higher risk tolerance, you might be more comfortable with ETFs that have slightly higher fees if they offer unique features or benefits.

• Investment goals: Determine whether you’re investing for income, growth, or both. This will help you select the best S&P 500 ETFs in Australia that align with your objectives.

• Investment timeframe: Long-term investors may prioritise low fees and stable performance, while short-term traders might focus on liquidity and trading flexibility.

6 best S&P 500 ETFs to trade now

Australian investors have several choices available to them when it comes to investing in the S&P 500 using ETFs. To assist investors in making a precise selection, here is a compilation of the finest S&P 500 ETFs available on the ASX. These specific ETFs were chosen considering elements such as their management fees, historical performance, and the size of their assets.

iShares S&P 500 AUD ETF (IVV)

The iShares S&P 500 AUD ETF (IVV) stands out as one of the top S&P 500 ETFs for Australian investors due to its low management fee, high liquidity, and the option for currency hedging.

Unique selling points:

• Low management fee: At just 0.04%, the IVV offers one of the lowest management fees among S&P 500 ETFs listed on the ASX, making it a cost-effective choice for investors.

• AUD hedging option: This ETF provides an Australian dollar hedging option, helping to mitigate currency risk for Australian investors who want to avoid fluctuations between the AUD and USD.

SPDR S&P 500 ETF Trust (SPY)

The SPDR S&P 500 ETF Trust, commonly known as SPY, is widely recognised as the original, and still one of the top S&P 500 ETFs available to Australian investors.

Unique selling points:

• Low Expense Ratio: Despite its size, SPY maintains a competitive expense ratio of 0.0945 %, ensuring cost-efficiency for investors.

• Long track record: With a history dating back to 1993, SPY is the first and one of the most established S&P 500 ETFs, providing a proven track record of performance.

BetaShares S&P 500 Equal Weight ETF (QUS)

BetaShares S&P 500 Equal Weight ETF (QUS) stands out as one of the top S&P 500 ETFs for Australian investors due to its unique equal-weighted approach, which can offer a more balanced exposure to the S&P 500 index.

Unique selling points:

• Equal weighting: Unlike traditional market-cap weighted ETFs, QUS assigns an equal weight to each constituent of the S&P 500, providing a more diversified exposure.

• Regular rebalancing: The ETF is rebalanced quarterly to maintain equal weighting, which can help to capture opportunities and manage risk more effectively.

iShares S&P 500 (AUD Hedged) ETF (IHVV)

IHVV's unique approach to currency risk management is both cost-effective and risk-mitigating, making it ideal for reducing currency risk while investing in the U.S. market.

Unique selling points:

• Currency hedging: IHVV's main attraction is its currency hedging feature, designed to protect Australian investors from fluctuations in the exchange rate between the AUD and USD.

• Cost effective: With a 0.1% management fee, IHVV provides a cost-effective way to gain exposure to the S&P 500 while managing currency risk.

BetaShares S&P 500 Yield Maximiser Fund (UMAX)

With its revenue maximisation strategy and diversified exposures, UMAX combines revenue generation and capital growth, providing a way to increase the yield on the S&P 500 while balancing risk.

Unique selling points:

• Dividend focus: UMAX is designed to provide investors with a higher yield by focusing on the highest dividend-paying stocks within the S&P 500 index. The 12-month distribution yield is 4.5%.

• Income generation: The fund employs strategies such as covered call writing to generate additional income, potentially offering a higher yield compared to traditional S&P 500 ETFs.

GLOBAL X S&P 500 S&P 500 High Yield Low Volatility ETF (ZYUS)

Focusing on high-yield, low-volatility stocks, ZYUS offers a way to increase S&P 500 yields while balancing risk. It combines income generation and capital preservation, making it an attractive option.

Unique selling points:

• High Yield with Lower Volatility: ZYUS is curated to provide a balance of high dividend yield and lower volatility stocks from within the S&P 500, a dual advantage for risk-conscious investors. The 12-month distribution yield is 3.92 %.

• Dividend Growth Potential: This ETF focuses on companies with a track record of increasing dividends, which can be a strong indicator of financial health and growth potential.

Risks and countermeasures for investing in S&P 500 ETFs

Investing in the top S&P 500 Index ETFs offers many advantages, but it is not without risk. For any investor considering adding these ETFs to their portfolio, it is critical to be aware of these potential pitfalls and understand how to manage them.

Market risk

• Risk: The value of an S&P 500 Index ETF can fluctuate depending on market movements, economic conditions and geopolitical events.

• Countermeasure: Diversify your portfolio with other asset classes including bonds, commodities and international equities.

Interest rate risk

• Risk: Changes in interest rates can affect the performance of S&P 500 Index ETFs, especially those with high concentrations in interest rate sensitive sectors.

• Countermeasure: Monitor economic indicators and central bank policies that affect interest rates. When interest rates are expected to rise, adjust your portfolio to include defensive sectors or fixed income investments.

Currency risk

• Risk: Investing in US ETFs from Australia exposes you to currency fluctuations between the AUD and USD.

• Countermeasure: Consider an S&P 500 ETF that offers currency hedging options or uses currency derivatives to hedge against adverse movements.

Investment strategies for different types of investors

• Novice investors: Start with a small investment in the low-cost, widely traded S&P 500 Index ETF. Consider a regular investment plan, such as using dollar-cost averaging.

• Long-term investors: Focus on S&P 500 Index ETFs with a proven track record of stability and low fees. use a buy-and-hold strategy to periodically rebalance your portfolio to maintain your desired asset allocation.

• Active trader: When trading the S&P 500 ETF, look for ETFs with high liquidity and narrow bid-ask spreads, utilise technical analysis and keep abreast of market developments to time your entries and exits. Implement risk management strategies such as stop-loss orders to protect your investment.

Final words on finding the best S&P 500 ETFS

With this article summarising the top 6 S&P 500 ETFs on the ASX in 2024 for Australian investors, it's clear that investing in Australia's top S&P 500 ETFs can offer a wealth of opportunities. From diversification and cost-effectiveness to transparency and liquidity, these ETFs offer compelling investment options for those looking to access the US market.

The key to real success as an investor is to stay informed and adjust your strategy as needed. Read financial news and market updates on a regular basis for the latest economic trends and market conditions. Closely monitor the performance of your S&P 500 ETF of choice and adjust your portfolio as necessary. Regularly rebalance your portfolio to maintain your desired asset allocation and risk profile, ensuring that your investments remain aligned with your financial goals and risk tolerance. Continuously learn about new investment tools, strategies and market dynamics.

Before making any investment, it is important to remember that investing in the S&P 500 ETF or any financial instrument involves risk. Market volatility, geopolitical events and economic changes can all affect the performance of your investments. It is critical to conduct thorough research, understand your risk tolerance and seek professional advice when necessary.