Susan Dziubinski: I’m Susan Dziubinski with Morningstar. Warren Buffett has said in the past that one of the best ways for investors to own stocks is through an index fund that charges minimal fees. So many were surprised to find that Berkshire Hathaway BRK.A BRK.B sold its entire positions in two market-tracking ETFs last quarter: SPDR S&P 500 ETF SPY (ticker: SPY) and Vanguard S&P 500 ETF VOO (ticker: VOO).
Now, neither Buffett nor his colleagues have commented publicly on the sales. But that hasn’t stopped the financial media from speculating. Some suggest that Buffett is skeptical about overall market valuations. Others think the sales are simply another example of Berkshire adding to its record-breaking cash reserve, which topped $321 billion at the end of 2024.
Warren Buffett Sold These 2 ETFs. Should You?
So, what should investors who own one of these two ETFs make of the sales? From Morningstar’s perspective, not much. SPY and VOO are two of the biggest ETFs for a reason: They provide investors with a low-cost way to get exposure to US large-cap stocks—and as a result, these ETFs are valuable anchors in investor portfolios. Plus, Berkshire’s sales aren’t a reflection of any fundamental changes at these ETFs. Both ETFs earn high ratings from Morningstar, though VOO does earn a higher rating than SPY, thanks in part to its lower fees.
Yet investors can use Berkshire’s sale as a reminder to check in on their own portfolio allocations. Is your portfolio overly exposed to US large company stocks? Could you benefit from adding some diversification though a total market ETF that includes smaller companies than the S&P 500 does? Or maybe you should consider adding an ETF that invests in international stocks to your portfolio for some additional diversification.
In the end, Berkshire’s move provides us all with food for thought for our own portfolios, not a sell signal.
For more ETF ideas, be sure to visit Morningstar.com.
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The author or authors do not own shares in any securities mentioned in this article.
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