What two ETFs are good enough for Warren Buffett?
Buffett's favorite ETF
Key Points. Warren Buffett made his fortune by investing in individual companies with great long-term advantages. But his top recommendation for anyone is to buy a simple index fund. Buffett's recommendation underscores the importance of diversification.
Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification.
A stickler for value, Buffett is likely a fan of the low fees that both of these ETFs feature. VOO has an expense ratio of just 0.03%, while SPY charges 0.09%. Both are extremely low fees, but it has to be said that VOO is cheaper.
| ETF | Assets | Expense ratio |
|---|---|---|
| Vanguard High Dividend Yield Index ETF (VYM) | $51 billion | 0.06% |
| Vanguard Total International Stock ETF (VXUS) | $63 billion | 0.07% |
| Vanguard Total World Stock ETF (VT) | $33 billion | 0.07% |
| iShares Core U.S. Aggregate Bond ETF (AGG) | $101 billion | 0.03% |
However, Berkshire increased its stake in Occidental Petroleum, demonstrating Buffett's continued interest in the energy sector. Some of the best performing Warren Buffett stocks in 2023 include Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and D.R.
- Buy Companies at Bargain Prices. ...
- Be Patient. ...
- Go Against Conventional Wisdom. ...
- Stick with What You Know. ...
- Be Self-Confident. ...
- Buy Companies with Competitive Advantages. ...
- Believe in America. ...
- Which of these lessons do you apply to your own investing?
Most of Warren Buffett's portfolio through his holding company Berkshire Hathaway is comprised of individual stocks. He does own two ETFs, though, both of which are S&P 500 ETFs: the Vanguard S&P 500 ETF (VOO 1.03%) and the SPDR S&P 500 ETF Trust (SPY 1.05%).
Warren Buffett's Berkshire Owns 2 ETFs: SPY and VOO
Regardless of what Berkshire buys or sells, one of the cheapest ways for an investor to diversify is with an exchange-traded fund.
Generally speaking, fewer than 10 ETFs are likely enough to diversify your portfolio, but this will vary depending on your financial goals, ranging from retirement savings to income generation.
What are the best ETFs for 2024?
| Ticker | Fund name | 5-year return |
|---|---|---|
| SMH | VanEck Semiconductor ETF | 33.26% |
| SOXX | iShares Semiconductor ETF | 30.19% |
| XLK | Technology Select Sector SPDR Fund | 27.00% |
| IYW | iShares U.S. Technology ETF | 26.17% |
Conclusion. Warren Buffet prefers to invest in REITs instead of real property because they are a great source of passive income, are reward-oriented, and are more liquid than property ownership.
What do analysts say about VOO? VOO's analyst rating consensus is a Moderate Buy.
| Symbol | ETF Name | 10y Chg 2-22-24 |
|---|---|---|
| SMH | VanEck Semiconductor ETF | 992% |
| SOXX | iShares Semiconductor ETF | 850% |
| PSI | Invesco Semiconductors ETF | 770% |
| XSD | SPDR S&P Semiconductor ETF | 626% |
| Symbol | Name | Avg Daily Share Volume (3mo) |
|---|---|---|
| SQQQ | ProShares UltraPro Short QQQ | 119,589,141 |
| SOXS | Direxion Daily Semiconductor Bear 3x Shares | 97,642,328 |
| SPY | SPDR S&P 500 ETF Trust | 76,845,578 |
| TQQQ | ProShares UltraPro QQQ | 75,472,586 |
- 9 Safest Index Funds and ETFs to buy in 2024. ...
- Vanguard S&P 500 ETF (VOO 0.04%) ...
- Vanguard High Dividend Yield ETF (VYM 0.23%) ...
- Vanguard Real Estate ETF (VNQ -0.05%) ...
- iShares Core S&P Total U.S. Stock Market ETF (ITOT 0.1%) ...
- Consumer Staples Select Sector SPDR Fund (XLP 0.31%) ...
- iShares 0-3 Month Treasury Bond ETF (SGOV 0.03%)
| Stock | Q4 change in shares | Change |
|---|---|---|
| Chevron Corp. (CVX) | +15,845,037 | +14.4% |
| HP Inc. (HPQ) | -79,666,320 | -77.7% |
| Apple Inc. (AAPL) | -10,000,382 | -1.1% |
| Occidental Petroleum Corp. (OXY) | +243,715,804 | +8.7% |
- Apple (AAPL -1.00%): $167,564,822,400 in market value.
- Bank of America: $35,209,924,885.
- American Express (AXP 0.27%): $32,226,370,392.
- Coca-Cola (KO 0.08%): $23,756,000,000.
- Chevron (CVX -0.49%): $18,989,654,896.
- Occidental Petroleum (OXY -0.84%): $15,010,057,107.
Top stock holdings in Buffett's portfolio
Bank of America (BAC) – $28.3 billion. American Express (AXP) – $22.6 billion. Coca-Cola – $22.4 billion. Chevron (CVX) – $18.6 billion.
Warren Buffett once said, “The first rule of an investment is don't lose [money]. And the second rule of an investment is don't forget the first rule. And that's all the rules there are.”
What is Warren Buffett's 90 10 rule?
Warren Buffet's 2013 letter explains the 90/10 rule—put 90% of assets in S&P 500 index funds and the other 10% in short-term government bonds.
Of course, he'd argue that he's actually a business picker instead of a stock picker. The businesses he picks, though, tend to translate to good stocks. The legendary investor doesn't just pick individual stocks -- he also likes some exchange-traded funds (ETFs). Buffett really likes one ETF, in particular.
The current volatility for Berkshire Hathaway Inc. (BRK-B) is 3.18%, while Vanguard S&P 500 ETF (VOO) has a volatility of 3.94%. This indicates that BRK-B experiences smaller price fluctuations and is considered to be less risky than VOO based on this measure.
Graham Holdings “amounts to a small-scale version of Buffett's Berkshire Hathaway, with a large group of unrelated businesses and a strong balance sheet,” according to Barron's.
Two famous fund managers have large share positions in Snowflake (SNOW) stock. On the other hand, investors may be concerned about Snowflake's decelerating revenue growth. Investors should only consider a small position in SNOW stock.
