The iShares S&P 500 ETF (ASX: IVV) is one of the most popular exchange-traded funds (ETFs) on the Australian share market. And this is for good reason.

This low-cost, high-quality fund provides Australian investors with exposure to 500 of the largest stocks listed in the United States.

From tech titans to consumer giants, the IVV ETF offers a diversified gateway to the world's biggest stock market.

Here are five reasons why smart investors might want to consider buying this ASX ETF today.

1. Exposure to world-leading businesses

The iShares S&P 500 ETF tracks the S&P 500 Index, giving investors a stake in some of the most dominant companies on the planet. This includes Apple (NASDAQ: AAPL), Microsoft Corp (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), Tesla (NASDAQ: TSLA), Alphabet (NASDAQ: GOOGL), Nvidia (NASDAQ: NVDA), and Walmart (NYSE: WMT). These are global businesses with entrenched competitive advantages, strong balance sheets, and enormous cash-generating capabilities.

2. Strong performance

The S&P 500 has delivered an average annual return of around 10% over the long term. While past performance is not a guarantee of future results, this index has weathered wars, recessions, and pandemics, all while creating wealth for patient investors. By owning the IVV ETF, you're effectively backing a diversified portfolio of blue-chip US stocks with a strong track record of compounding returns. If the market is going higher over the next decade, these shares are likely to lead the charge.

3. Instant diversification

Instead of trying to pick individual winners — a strategy even professional investors struggle with — this ASX ETF allows you to own a slice of 500 stocks in a single trade. This reduces the risk of a single stock hurting your portfolio. It also helps smooth out returns over time. Better yet, the IVV ETF comes with a management fee of just 0.04%. This makes it one of the most cost-effective ETFs available to Australian investors. This means more of your returns stay in your portfolio instead of going to a fund manager.

4. A hedge against domestic concentration risk

Australian portfolios tend to be heavily weighted towards sectors like banks and mining. The IVV ETF provides diversification by offering exposure to sectors that are under-represented on the ASX. This includes technology, healthcare, and consumer discretionary. This makes it a powerful complement to a home-biased portfolio, helping investors tap into global trends and innovation.

5. Warren Buffett's stamp of approval

Legendary investor Warren Buffett has long said that most investors should buy a low-cost index fund that tracks the S&P 500 index instead of trying to beat the market. In fact, Buffett has stated that he wants the bulk of his estate to be invested in one. If it is good enough for the Oracle of Omaha, it certainly is worth a look from Australian investors seeking reliable, long-term growth.

Foolish takeaway

For those seeking a simple, low-maintenance way to invest in the world's top companies, the iShares S&P 500 ETF is tough to beat. With instant diversification, global exposure, and a history of strong returns, this ETF could be a smart addition to any long-term investment portfolio.