Warren Buffett, the long-time CEO of Berkshire Hathaway, oversees a $295 billion portfolio of 45 publicly traded stocks and securities. His investment decisions have propelled the company’s stock to a compound annual return of 19.8% since he took over in 1965, vastly outperforming the S&P 500’s average annual return of 10.2% over the same period. Though Buffett is a full-time professional investor, he often advises retail investors to buy exchange-traded index funds (ETFs) instead of trying to replicate his success.
One ETF in particular, the Vanguard S&P 500 ETF, could potentially deliver a remarkable 150% return by 2030, according to a top Wall Street analyst. This ETF, which is highly cost-effective, tracks the performance of the S&P 500 by holding the same stocks and maintaining similar weightings. The expense ratio of 0.03% makes it one of the cheapest ETFs in the world.
In contrast, the SPDR S&P 500 ETF Trust, another option, has an expense ratio of 0.09%. The S&P 500 index is diversified across all 11 sectors of the economy and includes 500 of the largest U.S. companies. This diversification includes tech giants like Nvidia, Apple, and Microsoft, which are heavily weighted in the index due to their significant market capitalizations.
Advice: invest in Vanguard ETF
These companies are leaders in the AI race, which is expected to drive substantial value creation and productivity gains in the coming years. Tom Lee, an analyst from Fundstrat Global Advisors, has made some accurate predictions in recent years.
He forecasts that the S&P 500 could reach 15,000 by 2030, implying an upside of about 150% from current levels. Lee cites the demographic tailwind of millennials and Gen Zers entering their prime earning years as a key driver for this growth. Furthermore, advancements in AI are likely to contribute significantly to market performance by increasing automation and productivity.
However, it is essential to acknowledge that predictions are not guarantees. Factors such as a global recession or another financial crisis could delay the S&P 500’s growth. Nonetheless, historical trends suggest that the index is likely to continue growing, making the Vanguard S&P 500 ETF a potentially lucrative long-term investment.
Berkshire Hathaway is a significant holding in the Vanguard S&P 500 ETF, along with other major companies like Tesla, JPMorgan Chase, and Costco Wholesale. Buffett’s endorsement of index funds, combined with compelling growth projections, makes the Vanguard S&P 500 ETF an attractive option for investors of all skill levels.
