Key Morningstar Metrics for iShares Core S&P 500 Index ETF XUS
- : GoldMorningstar Medalist Rating
- : HighProcess Pillar
- : Above AveragePeople Pillar
- : Above AverageParent Pillar
IShares S&P 500 accurately represents the large-cap US stock market, allowing its low fee and efficient portfolio to carve out a long-term edge.
The fund tracks the S&P 500. A committee selects 500 of the largest US stocks, or roughly 80% of the US stock market, and weights them by the market cap. The index committee has discretion over selecting companies that meet its liquidity and profitability standards. While a committee-based approach may lack clarity, it adds flexibility to reduce unnecessary changes during reconstitution, taming transaction costs compared with more rigid rules-based indexes.
Assigning position sizes based on a stock’s market cap is a simple and efficient method to weight the portfolio. Since US stocks are highly traded, they quickly reflect new information, and carving an edge is difficult. Market-cap weighting naturally adjusts to price changes without frequent rebalancing, generating lower trading costs. That, and lower fees, give large-blend index funds a long-term performance advantage over most actively managed peers.
The fund holds a broad, well-diversified portfolio. It typically includes around 500 stocks, and the top 10 represented around 35% of the portfolio at the end of February 2026. Still, market-cap weighting can contribute to portfolio concentration when a few stocks dominate the market. This has been the case lately with a handful of mega-cap technology stocks growing to prominence and commanding a greater share of the portfolio.
When a few richly valued companies or sectors power most of the market gains, market-cap weighting may overexpose the strategy to the fluctuations of one stock or sector. But this is not a fault in design, as it simply reflects the market’s composition. Its low turnover, low fee, and broad diversification across the US market more than offset these risks.
The US exchange-traded fund returned 15.5 % annualized over the past 10 years through February 2026. It holds little cash, which should help it outperform cash-saddled active peers during market rallies. Likewise, low cash drag could hurt this fund when the stock market declines, but long-term positive returns give this efficient approach a clear edge. Performance across share classes will vary on account of differences in fees and currency exchange rates for non-US investors.
iShares Core S&P 500 Index ETF: Performance Highlights
The S&P 500 returned 15.5% annualized over the past 10 years through February 2026. The funds following this strategy vary in fees, influencing relative returns. However, fees across the board tend to be low, allowing them to capture nearly all of the S&P 500’s performance. Currency performance across regions can also drive relative returns. Additionally, most share classes engage in securities lending, which allows them to earn back a portion of their fees, slightly improving investor returns.
The strategy’s performance closely follows the ups and downs of the US stock market, since it is always fully invested. All else equal, this strategy should outperform Morningstar Category peers that hold cash during market rallies, holding back returns. But no cash buffer also means that the strategy may lag similar peers when the market falls.
The strategy tends to favor the largest US stocks and will perform best when those stocks soar. That’s been the case over the past decade or so. The market’s largest stocks, like Nvidia, have dominated the S&P 500’s returns. However, if mid- and small-cap stocks outperform, it will lag peers that favor smaller companies.
Investors should expect meaningful fluctuations in performance over shorter periods because of the S&P 500’s dependence on the market’s largest companies. In its more-than-50-year history, the S&P 500 has registered a negative annual return about 20% of the time. However, this is still less often than its average US large-blend peer, and only twice did it decline over a 10-year period.
For non-US investors, iShares offers traditional or currency-hedged funds that replicate this strategy. While hedged funds mitigate currency risk, the cost of hedging can erode returns. Unhedged funds are exposed to currency fluctuations, but the impact of foreign-exchange rates on total return tends to wash out in the long term.
