Does Warren Buffett own any ETF?
Warren Buffett owns 2 ETFs—this one is better for everyday investors, experts say.
These were the stocks Buffett had in his portfolio heading into 2024. Some top picks of Berkshire are Apple Inc. (NASDAQ:AAPL), Coca-Cola Co (NYSE:KO) and Chevron Corp (NYSE:CVX).
Summary. Investing in the S&P 500 index fund, such as VOO, is a winning long-term strategy. Historical data shows that the market has consistently gone higher despite obstacles and downturns.
QQQ - Performance Comparison. In the year-to-date period, VOO achieves a 7.69% return, which is significantly higher than QQQ's 7.20% return. Over the past 10 years, VOO has underperformed QQQ with an annualized return of 12.70%, while QQQ has yielded a comparatively higher 18.16% annualized return.
| Fund (ticker) | 5-year annual returns | Expense ratio |
|---|---|---|
| Vanguard S&P 500 ETF (VOO) | 15.2% | 0.03% |
| SPDR S&P 500 ETF Trust (SPY) | 15.2% | 0.095% |
| iShares Core S&P 500 ETF (IVV) | 15.2% | 0.03% |
| Schwab S&P 500 Index (SWPPX) | 15.2% | 0.02% |
At its core, Warren Buffett's investing strategy is not all that complicated: Buy businesses, not stocks. In other words, think like a business owner, not someone who owns a piece of paper (or these days, a digital trade confirmation).
- Never lose money. ...
- Never invest in businesses you cannot understand. ...
- Our favorite holding period is forever. ...
- Never invest with borrowed money. ...
- Be fearful when others are greedy.
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.
Stock Market Average Yearly Return for the Last 10 Years
The historical average yearly return of the S&P 500 is 12.02% over the last 10 years, as of the end of December 2023.
In the last 30 Years, the Vanguard S&P 500 (VOO) ETF obtained a 10.29% compound annual return, with a 15.12% standard deviation.
What is the most profitable ETF?
- iShares MSCI Turkey ETF (ticker: TUR)
- WisdomTree Japan Hedged Equity Fund (DXJ)
- Simplify Interest Rate Hedge ETF (PFIX)
- VanEck Semiconductor ETF (SMH)
- Amplify U.S. Alternative Harvest ETF (MJUS)
- AdvisorShares Pure U.S. Cannabis ETF (MSOS)
- YieldMax NVDA Option Income Strategy ETF (NVDY)
QQQ usually declines more in bear markets, has high sector risk, often appears overvalued, and holds no small-cap stocks. This ETF allows traders to invest in the largest 100 non-financial companies listed on the Nasdaq.
If you want to own only the biggest and safest stocks, choose VOO. If you want more diversification and exposure to mid-caps and small-caps, choose VTI. If you can't decide, consider simply buying both of them (assuming that commissions are low or free).
The answer: RSP has outperformed the S&P 500 by 0.57% on an annualized basis since the ETF's inception two decades ago. Source: Morningstar Direct. Data begins at RSP inception date of April 24, 2003, through September 30, 2023.
You only need one S&P 500 ETF
You could be tempted to buy all three ETFs, but just one will do the trick. You won't get any additional diversification benefits (meaning the mix of various assets) because all three funds track the same 500 companies.
S&P 500 Index Versus Nasdaq 100 Performance
Nasdaq 100 has significantly outperformed S&P 500 in terms of performance.
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.”
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.
Instead, he has consistently told investors to buy an S&P 500 index fund. "I recommend the S&P 500 index fund, and have for a long, long time to people. And I've never recommended Berkshire to anybody," Buffett said at Berkshire's annual shareholder meeting in 2021.
The 70/30 rule is a guideline for managing money that says you should invest 70% of your money and save 30%. This rule is also known as the Warren Buffett Rule of Budgeting, and it's a good way to keep your finances in order.
What is the 70 30 Buffett Rule investing?
What Is a 70/30 Portfolio? A 70/30 portfolio is an investment portfolio where 70% of investment capital is allocated to stocks and 30% to fixed-income securities, primarily bonds. Any portfolio can be broken down into different percentages this way, such as 80/20 or 60/40.
| Stock | Number of Shares Owned | Value of Stake |
|---|---|---|
| Apple (NASDAQ:AAPL) | 905,560,000 | $154.6 billion |
| Bank of America (NYSE:BAC) | 1,032,852,006 | $36.8 billion |
| American Express (NYSE:AXP) | 151,610,700 | $33.9 billion |
| Coca-Cola (NYSE:KO) | 400,000,000 | $23.8 billion |
In contrast, the riskiest ETF in the Morningstar database, ProShares Ultra VIX Short-term Futures Fund (UVXY), has a three-year standard deviation of 132.9. The fund, of course, doesn't invest in stocks. It invests in volatility itself, as measured by the so-called Fear Index: The short-term CBOE VIX index.
However, it's rare for broad-market ETFs to go to zero unless the entire market or sector it tracks collapses entirely. The sharpest decline the last few decades has been in 2007, when some total stock market ETFs like IWDA lost 37% in one year.
"Leveraged and inverse funds generally aren't meant to be held for longer than a day, and some types of leveraged and inverse ETFs tend to lose the majority of their value over time," Emily says.
