From the January 2012 issue of Research Magazine • Subscribe!

December 26, 2011

A Warren Buffett ETF?

We know that financial product developers have thought about introducing a “Warren Buffett ETF,” not because the investing public really needs it, but because there’s no shortage of dubious ideas. Interestingly, though, financial marketers might not have to invent a Buffett ETF because one already exists.

In November, Buffett plowed $10.7 billion into IBM for a 5.4 percent stake. It’s Buffett’s first foray into the technology sector, which he has purposely avoided throughout his illustrious career. Who needs iPads when you can have razor blades?

A closer gander at Berkshire Hathaway’s stock portfolio, which includes IBM along with American Express and Coca-Cola among others, is an investment mix that almost resembles the SPDR Dow Jones Industrial Average ETF (DIA).

DIA is linked to the Dow Industrials. After Buffett’s IBM purchase, he now owns 11 of 30 Blue Chip stocks within the benchmark, which means he only has another 19 Dow stocks to buy before he owns the entire group. In the meantime, if you want to buy an ETF that closely tracks Buffett’s portfolio, DIA looks like the ticket. •

 

Reprints Discuss this story
This is where the comments go.