IVV 15:1 stock split: What you need to know
The iShares S&P 500 Exchange Traded Fund (ETF) ($IVV) will undergo a 15:1 stock split on 9 December 2022.
IVV will become more accessible to first time and returning investors with a lower entry price.
What will happen?
A 15:1 stock split means that shareholders will receive fifteen units in the ETF for every one unit they held on 6 December 2022. This is the last day IVV will be trading in its current form. If IVV remains at its current price of $597.80 at 24/11/2022, five units of IVV would become seventy-five units worth $39.85 each after the split. However, the total value of the investment would remain the same at $2,989.00.
Are stock splits common?
Stock splits are not a regular event as they generally occur if a significant change in share price has been sustained over time. This is IVV’s first stock split and its price has shown a steady upward trend over the past 5 years from $344.43.
At the same time the currency hedged version of this ETF ($IHVV) will undergo a 10:1 stock split. In this case one unit worth $383.27 at 24/11/2022 would convert into ten units each worth $38.32.
iShares’ parent company BlackRock, Inc.($BLK) has made efforts to review its product line during the past few years periodically. They have made similar decisions regarding stock splits for their U.S. products in 2020 and 2021. The business has also been proactive in closing less popular offerings.
Although no specific reason has been published for this decision, the lower entry price will benefit investors with small trading amounts. There are no fractional shares available in this situation. It could also encourage regular investments and improve the ETF’s liquidity by enabling trading at higher price levels.
All about IVV
This ETF tracks 500 of the largest U.S. stocks by market cap and is traded on the ASX like a regular share. IVV provides a simple way of gaining exposure to the American economy. Its 26% allocation to the tech sector can counterbalance the Australian market’s financial and resource heavyweights.
IVV was one of the earliest ETF’s available on the ASX and has grown into the third largest with $5.1b of funds under management by the end of October 2022. It has the second lowest fee at 0.04%, just behind its competitor Vanguard US Total Market Shares Index ($VTS) at 0.03%. Although its annual return was 1.29% for the past year, the annualised performance is still an astonishing 14.28% over the past 5 years.
iShares’ success as the world’s largest ETF issuer has helped BlackRock become the biggest asset manager globally. The multi-national investment company headquartered in New York has gained a powerful voice in the industry and in politics through its immense size.
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Megan is a markets analyst at Stake, with 7 years of experience in the world of investing and a Master’s degree in Business and Economics from The University of Sydney Business School. Megan has extensive knowledge of the UK markets, working as an analyst at ARCH Emerging Markets - a UK investment advisory platform focused on private equity. Previously she also worked as an analyst at Australian robo advisor Stockspot, where she researched ASX listed equities and helped construct the company's portfolios.