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5 ETF Strategies to Follow Latest Investing Style of Buffett
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Billionaire investor Warren Buffett is famous for his incredible investment ideas. Investors must have waited with bated breath for tips from the Oracle of Omaha for the best moves in this coronavirus-ravaged world.
The top five positions make up more than three-quarters of the portfolio of Buffett’sBerkshire Hathaway’s (BRK.B - Free Report) , per a Seeking Alpha article. These holdings are Apple Inc. (AAPL), Bank of America (BAC), Coca-Cola (KO), American Express (AXP) and Kraft Heinz (KHC).
Against this backdrop, below we highlight a few ETF investing strategies that could replicate Buffett’s investing style.
Buy Gold Mining
Berkshire Hathaway took new positions of approximately 20.9 million shares of Barrick Gold (GOLD - Free Report) . The Fed’s super-dovish stance since March and the resultant moderate strength in the greenback, safe-haven demand for gold, lower oil prices, cheaper valuation and the relatively low debt of mining companies have facilitated the spectacular performance of gold mining stocks this year. One can bet on VanEck Vectors Gold Miners ETF (GDX - Free Report) , up 46.6% this year (read: Gold Mining Q2 Earnings Mostly Upbeat: ETFs in Focus).
All Banks May Not Boost Your Portfolio
Berkshire Hathaway exited its stake in Goldman Sachs, selling the 1.9 million shares that were remaining. During the second quarter, Berkshire also cut its positions in Wells Fargo (WFC) by 26% and JPMorgan Chase (JPM) by 61%. Buffett also cut stakes from U.S. Bancorp (USB), PNC Financial (PNC) and Bank of New York Mellon Corp. (BK).
Low rates, the resultant low net interest margin, a shaky economy and the likelihood of corporate and individual defaults were probably the reasons for dumping financial stocks. However, Warren Buffett is bullish on Bank of America, which have solid exposure to Invesco KBW Bank ETF (KBWB - Free Report) and iShares U.S. Financial Services ETF (IYG - Free Report) .
Consumer Staples to Win
Buffett’s Berkshire beefed up its stake in grocery chain Kroger (KR), purchasing 3 million additional shares in the quarter. The company last held 21.9 million shares in Kroger, a position valued at $742.6 million at the end of the quarter. Grocery chains and consumer staples stocks are true coronavirus winners as these are non-cyclical in nature.
The sector should be in favor till the economy goes through a rough stretch. Kroger has considerable positions in First Trust Nasdaq Retail ETF (FTXD) and John Hancock Multifactor Consumer Staples ETF . Berkshire also has solid exposure to Coca- Cola. And the stock has strong presence iniShares Evolved U.S. Consumer Staples ETF (IECS) and Consumer Staples Select Sector SPDR Fund (XLP) (read: Coke, PepsiCo Earnings Should Help Staples ETFs).
Keep Having Apple
AAPL is the largest 13F portfolio stake so far at about 44%.Apple is benefiting from continued momentum in the Services segment, driven by strong App Store sales and a robust adoption of Apple Music and Apple Pay. Non-iPhone devices, particularly Apple Watch and AirPod, are the other notable drivers in the long haul.
Apple’s focus on autonomous vehicles and augmented reality/virtual reality technologies presents growth opportunity in the future. Play Apple-heavy ETFs like iShares Dow Jones US Technology ETF (IYW - Free Report) and Select Sector SPDR Technology ETF (XLK - Free Report) (read: Warren Buffett Bets Big on Apple: Buy These ETFs).
Discard Airlines
Berkshire has offloaded stakes from United Continental, American Airlines and Southwest Airlines. Airlines have been extremely patchy amid coronavirus travel restrictions. After crashing in the peak of the coronavirus selloff, U.S. Global Jets ETF (JETS - Free Report) ) has gained some footing lately upon receiving the bailout fund and with the gradual reopening of the economy. However, if you are still doubtful about the dicey business prospect of airlines in the near term due to the likelihood of a decline in unnecessary travels, stay away from JETS.
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5 ETF Strategies to Follow Latest Investing Style of Buffett
Billionaire investor Warren Buffett is famous for his incredible investment ideas. Investors must have waited with bated breath for tips from the Oracle of Omaha for the best moves in this coronavirus-ravaged world.
The top five positions make up more than three-quarters of the portfolio of Buffett’sBerkshire Hathaway’s (BRK.B - Free Report) , per a Seeking Alpha article. These holdings are Apple Inc. (AAPL), Bank of America (BAC), Coca-Cola (KO), American Express (AXP) and Kraft Heinz (KHC).
Against this backdrop, below we highlight a few ETF investing strategies that could replicate Buffett’s investing style.
Buy Gold Mining
Berkshire Hathaway took new positions of approximately 20.9 million shares of Barrick Gold (GOLD - Free Report) . The Fed’s super-dovish stance since March and the resultant moderate strength in the greenback, safe-haven demand for gold, lower oil prices, cheaper valuation and the relatively low debt of mining companies have facilitated the spectacular performance of gold mining stocks this year. One can bet on VanEck Vectors Gold Miners ETF (GDX - Free Report) , up 46.6% this year (read: Gold Mining Q2 Earnings Mostly Upbeat: ETFs in Focus).
All Banks May Not Boost Your Portfolio
Berkshire Hathaway exited its stake in Goldman Sachs, selling the 1.9 million shares that were remaining. During the second quarter, Berkshire also cut its positions in Wells Fargo (WFC) by 26% and JPMorgan Chase (JPM) by 61%. Buffett also cut stakes from U.S. Bancorp (USB), PNC Financial (PNC) and Bank of New York Mellon Corp. (BK).
Low rates, the resultant low net interest margin, a shaky economy and the likelihood of corporate and individual defaults were probably the reasons for dumping financial stocks. However, Warren Buffett is bullish on Bank of America, which have solid exposure to Invesco KBW Bank ETF (KBWB - Free Report) and iShares U.S. Financial Services ETF (IYG - Free Report) .
Consumer Staples to Win
Buffett’s Berkshire beefed up its stake in grocery chain Kroger (KR), purchasing 3 million additional shares in the quarter. The company last held 21.9 million shares in Kroger, a position valued at $742.6 million at the end of the quarter. Grocery chains and consumer staples stocks are true coronavirus winners as these are non-cyclical in nature.
The sector should be in favor till the economy goes through a rough stretch. Kroger has considerable positions in First Trust Nasdaq Retail ETF (FTXD) and John Hancock Multifactor Consumer Staples ETF . Berkshire also has solid exposure to Coca- Cola. And the stock has strong presence iniShares Evolved U.S. Consumer Staples ETF (IECS) and Consumer Staples Select Sector SPDR Fund (XLP) (read: Coke, PepsiCo Earnings Should Help Staples ETFs).
Keep Having Apple
AAPL is the largest 13F portfolio stake so far at about 44%.Apple is benefiting from continued momentum in the Services segment, driven by strong App Store sales and a robust adoption of Apple Music and Apple Pay. Non-iPhone devices, particularly Apple Watch and AirPod, are the other notable drivers in the long haul.
Apple’s focus on autonomous vehicles and augmented reality/virtual reality technologies presents growth opportunity in the future. Play Apple-heavy ETFs like iShares Dow Jones US Technology ETF (IYW - Free Report) and Select Sector SPDR Technology ETF (XLK - Free Report) (read: Warren Buffett Bets Big on Apple: Buy These ETFs).
Discard Airlines
Berkshire has offloaded stakes from United Continental, American Airlines and Southwest Airlines. Airlines have been extremely patchy amid coronavirus travel restrictions. After crashing in the peak of the coronavirus selloff, U.S. Global Jets ETF (JETS - Free Report) ) has gained some footing lately upon receiving the bailout fund and with the gradual reopening of the economy. However, if you are still doubtful about the dicey business prospect of airlines in the near term due to the likelihood of a decline in unnecessary travels, stay away from JETS.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>