How to Capture Top Returns from Berkshire Hathaway Using ETFs

Berkshire Hathaway, managed by Warren Buffett and Charlie Munger for many years, holds a unique position in the market. Although classified as a financial stock, its management style resembles that of a large investment management company, with a slow-turnover stock portfolio and significant investments in private companies.

In recent years, Berkshire Hathaway has accumulated substantial cash reserves. Despite this, its stock performance remains strong, with both Class A and B shares increasing by over 21% in 2024, well above the S&P 500’s 15% gain.

For investors looking to invest in Berkshire Hathaway through ETFs, several options are available. Here are some ETFs holding more than 10% in Berkshire Hathaway stock:

Data Source: VettaFi, as of August 15, 2024

1. iShares U.S. Financial Services ETF (IYG):

   • Holding Percentage: Over 15%

   • Fund Features: The iShares U.S. Financial Services ETF (IYG) focuses on the financial sector, including banks, insurance companies, and investment firms. With over 15% of its assets invested in Berkshire Hathaway, it is one of the major holders of Berkshire Hathaway stock. About half of IYG's assets are allocated to Berkshire Hathaway and four other large financial stocks, providing broad exposure to the financial sector while offering substantial investment in Berkshire Hathaway.

2. Financial Select Sector SPDR ETF (XLF):

   • Holding Percentage: Over 13%

   • Fund Features: The Financial Select Sector SPDR ETF (XLF) tracks a broad range of financial industry sectors, including banking, insurance, and capital markets. With more than 13% of its assets invested in Berkshire Hathaway, it serves as a key vehicle for gaining exposure to the company. XLF’s diversified portfolio reflects the overall performance of the financial sector while enhancing return potential through its Berkshire Hathaway holdings.

3. iShares U.S. Financials ETF (IYF):

   • Holding Percentage: Over 13%

   • Fund Features: The iShares U.S. Financials ETF (IYF) focuses on the U.S. financial sector, including banks, insurance companies, and other financial services. With over 13% of its assets in Berkshire Hathaway, it offers similar exposure to the financial industry as XLF, with significant holdings in Berkshire Hathaway providing a robust investment option.

4. Davis Select U.S. Equity ETF (DUSA):

   • Holding Percentage: Close to 10%

   • Fund Features: The Davis Select U.S. Equity ETF (DUSA) is an actively managed ETF aimed at achieving market-beating returns through selective stock picks. Nearly 10% of the fund's assets are invested in Berkshire Hathaway. The active management strategy allows DUSA to adjust holdings based on market conditions, with Berkshire Hathaway as a significant position reflecting confidence in the company’s ongoing performance.

These ETFs offer investors an indirect way to invest in Berkshire Hathaway. By holding these funds, investors can benefit from Berkshire Hathaway’s performance while mitigating the risks associated with holding the company’s stock individually.

It is important to note that while these ETFs hold shares in Berkshire Hathaway, their performance may be influenced by other investments. Understanding the specific holdings within an ETF is crucial for making informed investment decisions. Therefore, investors should not only consider the holding percentages but also thoroughly review the overall investment strategy and risks of the funds.

Overall, investing in Berkshire Hathaway through ETFs is a convenient way for investors to gain exposure to the company’s returns at a lower cost and with diversified risk. This approach is worth considering for those seeking stable returns in the financial markets.

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