Around a Quarters worth of Warren Buffet's "Concealed" Investment Profile is Allocated to These 3 ETFs. Are They Excellent Choices for 2025?
Warren Buffett has a hidden portfolio, somewhat. The investments you see listed in Berkshire Hathaway's regulatory documents aren't the complete ones linked to the renowned investor.
In 1998, Berkshire acquired the reinsurance firm General Re, which itself possessed New England Asset Management (NEAM), an investment company that manages its own portfolio. NEAM possesses over 100 stocks and exchange-traded funds (ETFs), with around 21% of its portfolio, Buffett's "secret" portfolio, invested in three ETFs.
1. SPDR S&P 500 ETF Trust
The SPDR S&P 500 ETF Trust (SPY -0.36%) constitutes 13.1% of NEAM's overall holdings, making it the top investment in Buffett's hidden portfolio. It's also one of just two ETFs present in Berkshire Hathaway's portfolio.
It's not surprising to observe the SPDR S&P 500 ETF Trust's prominent position. It's the world's largest ETF based on assets under management. Additionally, it typically ranks among the most actively traded ETFs.
As its name suggests, this ETF aims to mirror the performance of the S&P 500 index. It owns 503 stocks from some of the most prosperous firms in the U.S., such as Apple, Microsoft, Nvidia, and Amazon. The significant gains in many of these mega-cap stocks, largely driven by the surging interest in artificial intelligence, have contributed to the SPDR S&P 500 ETF Trust's year-to-date increase of 27%.
2. iShares Core MSCI EAFE ETF
Many investors may not be as familiar with the second-largest holding in NEAM's portfolio. It's the iShares Core MSCI EAFE ETF (IEFA -0.06%). This ETF accounts for roughly 4.2% of NEAM's overall holdings.
The iShares Core MSCI EAFE ETF endeavors to track the performance of the MSCI EAFE IMI Index. Understanding the abbreviations in this index and ETF will help clarify its focus. MSCI stands for Morgan Stanley Capital International, an investment research firm. EAFE stands for Europe, Australasia, and the Far East. IMI stands for Investable Market Index.
Consequently, the iShares Core MSCI EAFE ETF centers on stocks of companies that operate in Europe, Australia, Asia, and the Far East. It owns 2,682 stocks with relatively equal weightage for each stock. The largest position for the ETF, Novo Nordisk, accounts for only 1.82% of its total portfolio.
3. Vanguard High Dividend Yield ETF
NEAM's third-largest holding is the Vanguard High Dividend Yield ETF (VYM 0.21%). This ETF accounts for approximately 4% of NEAM's portfolio.
The ETF's name reveals its focus. It seeks to replicate the performance of the FTSE High Dividend Yield Index. The Vanguard High Dividend Yield ETF owns 537 stocks and offers a dividend yield of 2.49%. Its top holdings include Broadcom, JPMorgan Chase, ExxonMobil, and Home Depot.
Vanguard is known for its low-cost funds. This ETF fits the narrative, offering an attractive annual expense ratio of only 0.06%.
Will these ETFs be excellent picks for 2025?
The arrival of the new year brings uncertainty that makes it challenging to forecast how these top ETFs in Buffett's hidden portfolio will perform. The policies of the incoming Trump administration could have a significant impact. For instance, if steep tariffs are imposed on all imports to the U.S. and spark a trade war, each of these three ETFs could face challenges (especially the iShares Core MSCI EAFE ETF.) On the other hand, corporate tax cuts could serve as a catalyst for the SPDR S&P 500 ETF Trust and the Vanguard High Dividend Yield ETF.
Because of the uncertainty, it's uncertain if these ETFs will be excellent picks for 2025. However, I believe all of them could be excellent picks for investors to own over the long run.
- Despite Warren Buffett keeping a significant portion of his investments hidden within Berkshire Hathaway, a notable portion of the funds managed by NEAM, a subsidiary of General Re, which Berkshire acquired in 1998, is allocated to the SPDR S&P 500 ETF Trust.
- This ETF, a top holding in Buffett's "secret" portfolio, aims to mimic the performance of the S&P 500 index and invests in 503 stocks from prominent U.S. companies like Apple, Microsoft, Nvidia, and Amazon, making it a potential long-term investment choice for many investors.
