Can Berkshire Outperform S&P 500 ETFs?

(1:30) – What Were The Big Takeaways From Berkshire Hathaway’s Sale of Apple Stock?
(7:40) – What Were Some of The Surprise Buys and Sells From Warren Buffett
(11:30) – Todd Combs and Ted Weschler Have Underperformed The Market: What Does This Mean?
(22:20) – What Will Happen When Warren Buffett Is No Longer In Charge?
(29:45) – Jim Simons vs Warren Buffett: Comparing The Two Investing Legends
(34:10) – Should You Be Adding S&P 500 Index Funds To Your Core Portfolio?
(38:20) – Episode Roundup: SPY, IVV, VOO, SPLG, MOAT, QQQM
Podcast@Zacks.com

In this episode of ETF Spotlight, I speak with Tracey Ryniec, Zacks Senior Equity Strategist, about investing like Warren Buffett and the future of Berkshire Hathaway (BRK.B) in a post-Buffett era.

Warren Buffett is one of the greatest and most respected investors of all time, so investors closely monitor all his moves. It was recently reported that Berkshire cut its Apple AAPL stake by 50% last quarter and added to its massive cash hoard. While the reasons for the sale were not disclosed, many interpreted it as a sign of Buffett’s concerns about stock market valuations.

There are many questions about succession at Berkshire, particularly after the passing of Charlie Munger. We discuss why Buffett’s decision to sell Apple may reflect cash management for succession planning.

Greg Abel, currently vice chairman of Berkshire Hathaway, is set to succeed Buffett at the helm of the company. Buffett’s deputies, Ted Weschler and Todd Combs, will also be involved in managing Berkshire’s vast equity portfolio.

The Financial Times recently examined the performance of these two investment lieutenants and concluded that their portfolios often lagged behind both the SPDR S&P 500 ETF SPY and Berkshire itself.

Moreover, while Berkshire has significantly outperformed the broader market over several decades, its most substantial outperformance occurred in the earlier years when the conglomerate was much smaller.

Buffett has long recommended that most investors stick with low-cost index funds. The iShares Core S&P 500 ETF IVV and Vanguard S&P 500 ETF VOO charge just 0.03% each, but the SPDR Portfolio S&P 500 ETF SPLG fee of 0.02% makes it the cheapest in this space.

The legendary investor favors companies with “economic moats,” which he describes as “economic castles protected by unbreachable moats.” In simple terms, a moat is a unique competitive advantage that enables a company to outperform others in the same industry over time.

The VanEck Morningstar Wide Moat ETF MOAT invests in attractively priced companies with sustainable competitive advantages.

Tune in to the podcast to learn more.

Make sure to be on the lookout for the next edition of ETF Spotlight! If you have any comments or questions, please email podcast@zacks.com.

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