Does Warren Buffett own ETFs?
Warren Buffett owns 2 ETFs—this one is better for everyday investors, experts say.
Warren Buffett has long recommended the S&P 500 index fund and ETF, and through his holding company Berkshire Hathaway, he also owns two of these types of investments: the Vanguard S&P 500 ETF (NYSEMKT: VOO) and the SPDR S&P 500 ETF Trust (NYSEMKT: SPY).
Warren Buffett's Berkshire Hathaway portfolio owns only two ETFs. One of the two is the Vanguard S&P 500 ETF (NYSEMKT: VOO). Buffett even instructed in his will that 90% of the cash his family inherits be invested in a low-cost S&P 500 fund -- and he recommended Vanguard's.
| Company | Shares held | Holding value |
|---|---|---|
| Vanguard S&P 500 ETF (VOO) | 43,000 | $18,782,400 |
| SPDR S&P 500 Trust ETF (SPY) | 39,400 | $18,727,214 |
| Jefferies (JEF) | 433,558 | $17,520,079 |
| Liberty Latin Americ Class C (LILAK) | 1,284,020 | $9,424,707 |
Buffett's company Berkshire Hathaway (BRK. A, BRK.B) publicly discloses its top stock holdings quarterly, giving you a glimpse behind the curtain to see the stock portfolio of one of the world's greatest investors. Among the 45 stocks Berkshire Hathaway holds, the top 10 represent about 87% of the company's holdings.
One of the biggest reasons Ramsey cautions investors about ETFs is that they are so easy to move in and out of. Unlike traditional mutual funds, which can only be bought or sold once per day, you can buy or sell an ETF on the open market just like an individual stock at any time the market is open.
Vanguard S&P 500 ETF
Billionaire investors like Warren Buffett and others are often known for their stock-picking abilities, and for good reason. But it's also important to know that many of the wealthiest investors in the world own exchange-traded funds, or ETFs, as well.
Apple Inc.
Apple is the world's most valuable public company and Warren Buffet's largest stock holding. Under the leadership of CEO Tim Cook, Apple has continued to provide outstanding value to long-term shareholders.
- iShares (BlackRock): $2.59 trillion.
- Vanguard: $2.36 trillion.
- SPDR (State Street): $1.22 trillion.
- Invesco: $454.78 billion.
- Charles Schwab: $320.21 billion3.
Almahasneh: The main reason comes down to—and I cover a lot of passive index funds—a lot of the differences in ratings, they come down to the difference in fees. VOO charges 3 basis points, while SPY charges 9 basis points. Both are very low cost compared to the average ETF in the US market.
What ETF does Buffett recommend?
Warren Buffett has long recommended the S&P 500 index fund and ETF, and through his holding company Berkshire Hathaway, he also owns two of these types of investments: the Vanguard S&P 500 ETF (VOO -0.18%) and the SPDR S&P 500 ETF Trust (SPY -0.18%).
“My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.” Buffett recommended using Vanguard's S&P 500 index fund.
- American Express: 20.6% stake. As of the morning of March 5, the stock was up 15.75% year-to-date and 21.7% in the past year. ...
- Ally Financial: 9.6% Stake. ...
- Bank of America: 13% Stake. ...
- Capital One: 3.3% Stake. ...
- Citigroup: 2.9% Stake. ...
- Nu Holdings: 2.3% Stake.
| Ticker | Company | % Portfolio |
|---|---|---|
| MSFT | Microsoft Corp. | 33.98% |
| BRK.B | Berkshire Hathaway Inc. | 16.80% |
| CNI | Canadian National Railway Co. | 16.29% |
| WM | Waste Management Inc. | 14.92% |
Over 30 years ago, Warren Buffett, CEO of Berkshire Hathaway, made his first purchase of silver in anticipation of the metal's demonetization by the U.S. Government. Since that time he has followed silver's fundamentals but no entity he manages has owned it.
Buffett's current vehicle, the 2014 Cadillac XTS that he has owned for approximately ten years, is a testament to his reputation for frugality.
Investing in the stock market is one of the most effective ways to generate long-term wealth, and you don't need to be an experienced investor to make a lot of money. In fact, it's possible to retire a millionaire with next to no effort through exchange-traded funds (ETFs).
Market risk
The single biggest risk in ETFs is market risk. Like a mutual fund or a closed-end fund, ETFs are only an investment vehicle—a wrapper for their underlying investment. So if you buy an S&P 500 ETF and the S&P 500 goes down 50%, nothing about how cheap, tax efficient, or transparent an ETF is will help you.
ETFs are designed to track the market, not to beat it
But many ETFs track a benchmarking index, which means the fund often won't outperform the underlying assets in the index. Investors who are looking to beat the market (potentially a riskier approach) may choose to look at other products and services.
Underlying Fluctuations and Risks
ETFs, like mutual funds, are often lauded for the diversification that they offer investors. However, it is important to note that just because an ETF contains more than one underlying position doesn't mean that it is immune to volatility.
Is 20 ETFs too much?
Holding too many ETFs in your portfolio introduces inefficiencies that in the long term will have a detrimental impact on the risk/reward profile of your portfolio. For most personal investors, an optimal number of ETFs to hold would be 5 to 10 across asset classes, geographies, and other characteristics.
If you don't want to put a lot of effort into managing your investments, then S&P 500 ETFs are a good solution. But if you're willing to do the work, then you might do even better in the long run with a portfolio of hand-picked stocks (although, the odds are against you).
When he goes down a track that doesn't make sense, he does not pay attention to anything, which is a weakness for a big business leader like him. His biggest weakness is greed. He loves money too much that it interfered with his relationship with his family for a long time.
Rule 1: Never lose money.
By following this rule, he has been able to minimize his losses and maximize his returns over time. He emphasizes this so much that he often says, “Rule number 2 is never forget rule number 1.”
- Podcast Discussion: Warren Buffett's 4 Rules to Investing.
- Rule 1: Vigilant Leadership.
- Rule 2: Long-Term Prospects.
- Rule 3: Company Stability and Understanding.
- Rule 4: Understanding Intrinsic Value.
