Buffett Recommends Vanguard S&P 500 ETF as 90% of Large-Cap Funds Trail Index
Updated
Updated · The Motley Fool · Aug 9
Buffett Recommends Vanguard S&P 500 ETF as 90% of Large-Cap Funds Trail Index
3 articles · Updated · The Motley Fool · Aug 9
Summary
Buffett says most people should buy and hold an S&P 500 index fund, specifically pointing to Vanguard’s S&P 500 ETF rather than building portfolios of individual stocks.
79% of U.S. large-cap mutual funds underperformed the S&P 500 over the past year, according to S&P data; that share rises to 89% over five years and 90% over 15 years.
He argues Berkshire Hathaway is a special case because its insurance operations and owned businesses need dependable cash flow and dividend income that broad index funds do not provide in the same way.
The broader lesson is that even professional stock-pickers often chase obvious winners after they become expensive, leaving ordinary investors better off using low-cost index funds as a core strategy.