4 ETFs Favored by Billionaire Investors – Can You Get Richer, Too?

Billionaire investors like Warren Buffett are often known for their stock-picking prowess, and for good reason. But it’s also important to know that many of the world’s wealthiest investors also own exchange-traded funds (ETFs).

Warren Buffett is no exception, and famous hedge fund manager Ray Dalio is another example of a billionaire who invests in ETFs. With that in mind, here are the four ETFs they hold, some basic information about them, and why they can be smart additions to your portfolio even if your primary focus is individual stocks.

Buffett’s Favorite ETF

Berkshire Hathaway‘S (BRK.A -1.27%) (BRK.B -1.35%) Large stock portfolios are notable for their holdings in companies such as: apologize and bank of america. However, it is also important to point out that the investment portfolio led by Warren Buffett has positions in two ETFs.

Berkshire’s portfolio includes two ETFs. S&P 500 Index Funds: Vanguard S&P 500 ETF (flight -0.97%) and SPDR S&P 500 ETF Trust (spy -1.00%). Simply put, it is a low-cost index fund that aims to replicate performance over time by investing in the 500 companies that make up a popular benchmark index. Although both are very cheap, the expense ratios of the Vanguard and SPDR ETFs are 0.03% and 0.09%, respectively.

Warren Buffett called investing in the S&P 500 a bet on American companies, and also noted that low-cost index funds are the best way to invest for most American investors. As Buffett said in his letter to shareholders, “American corporations, and consequently their basket of stocks, will almost certainly be worth much more in the years ahead.”

Although the S&P 500’s performance fluctuates greatly from year to year, it is a surprisingly consistent wealth creator over the long term. Since 1965, the S&P 500 has averaged a total return of 10.2% through the end of 2023. These returns can help you create massive wealth over time.

Major hedge funds hold nearly $2 billion in this ETF.

Bridgewater Associates is the world’s largest hedge fund and was founded in the 1970s by its famous manager, Ray Dalio. (He recently retired from active duty.)

Dalio, one of the world’s richest men, has built a reputation for investment strategies in currency and bond markets that produce strong performance, especially in difficult times. For example, Dalio was one of the few fund managers to generate positive returns during the 2008 financial crisis.

Bridgewater currently manages about $150 billion in assets, with only about $18 billion invested in publicly traded securities. Bridgewater holds significant stakes in the following companies: Procter & Gamble and Coca ColaYou might be surprised to learn that hedge funds’ two largest stock-based investments are ETFs.

According to the latest information, Bridgewater holds approximately $1 billion worth of stock. iShares Core S&P 500 ETF (IVV -0.97%) And another $950 million worth of iShares Core MSCI Emerging Markets ETF (IEMG -1.37%). The first is like the two S&P 500 ETFs owned by Buffett and is another low-cost way to invest in American companies.

The iShares Core MSCI Emerging Markets ETF tracks an index of large- and mid-cap companies based in emerging markets such as China, India, Taiwan, South Korea, and Brazil. It is a weighted index that owns approximately 1,200 different stocks, with larger holdings including: taiwan semiconductor, samsung, Tencent Holdingsand alibaba groupTo name a few things.

Simply put, this ETF is designed to provide exposure to economies with a lot of growth potential without the research and company-specific risks associated with individual stock selection.

The bottom line is that even billionaires recognize the wealth-creating potential of low-cost index funds. Even if you’re an active investor in individual stocks like Buffett or Dalio, solid index funds like these four can help form a great backbone of your portfolio.