Key insights
- The article suggests that Warren Buffett would endorse a portfolio consisting of 90% Vanguard S&P 500 ETF (VOO) and 10% Vanguard 0-3 Month Treasury Bill ETF (VBIL), based on his past recommendations for low-cost, simple investing. This allocation reflects a long-term growth strategy with a safety net of short-term treasuries. The influence is slightly positive as it reinforces the idea of passive investing in US equities.
Many people would put Warren Buffett in the pantheon of all-time successful investors. So it's no surprise that a lot of them want to replicate what he's done.
Even though he's no longer the CEO of Berkshire Hathaway, the Wall Street community listens very closely to what he says. If you go back and listen to some of his past shareholder meeting speeches, he endorses some very specific strategies that go beyond just Berkshire's individual stock positions.
Based on this, I think there are two ETFs he would endorse today. You probably wouldn't be surprised that both of them come from Vanguard.
Over the years, Warren Buffett has advocated for two ideas: Low cost and simplicity. Nowhere is this more apparent than in the plans he's established for his eventual passing.
Buffett said in his 2013 letter to Berkshire Hathaway shareholders: "What I advise here is essentially identical to certain instructions I've laid out in my will. ... My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's.) I believe the trust's long-term results from this policy will be superior to those attained by most investors."
He's essentially saying that a portfolio consisting mostly of U.S. large-cap stocks for growth and short-term Treasury bills for safety and liquidity is pretty much all most investors need -- and, of course, to keep costs as low as possible.
If he's mentioning Vanguard specifically, it's easy to consider the Vanguard S&P 500 ETF (VOO +1.21%) and the Vanguard 0-3 Month Treasury Bill ETF (VBIL +0.00%) as the perfect Buffett two-ETF portfolio.
These ETFs could be used collectively or individually. The S&P 500 makes an ideal long-term core portfolio holding for almost anyone, although I'd still prefer the Vanguard Total Stock Market ETF (VTI +1.16%) for this purpose. And if you need a sleeve of your portfolio to generate income or just wait to be put to use in equities at the right time, Treasury bills make all the sense in the world.
If you use the Vanguard S&P 500 ETF and the Vanguard 0-3 Month Treasury Bill ETF for these purposes, Buffett would probably give the thumbs-up.