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ETF Areas in the Spotlight Post Buffett's 2022 Meeting
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Berkshire Hathaway Chairman Warren Buffett held his conglomerate’s first in-person annual meeting since 2019 on Apr 30. This was a widely attended event as many shareholders wanted to listen to their favorite investment guru, popularly known as the “Oracle of Omaha”. The meeting, also famously dubbed as “Woodstock for Capitalists” was attended by some big CEOs like Jamie Dimon, CEO of JPMorgan (JPM - Free Report) , Activision’s CEO Bobby Kotick as well as Apple’s (AAPL - Free Report) CEO Tim Cook, per a CNBC article.
Given the excitement about this meeting in the investment world, it definitely brought a lot of ETF areas into the spotlight. Let’s take a look at some of them:
Energy ETFs
Buffett has been focusing on the energy sector, which has been one of the best performing S&P 500 sectors in 2022. In fact, the energy space has remained a prime investment area holding the interest of market participants since the beginning of the year. Reopening global economies, accelerated coronavirus vaccine rollout and improving labor markets were adding to the strength in the sector. Going on, the rally in oil prices due to the Russia-Ukraine crisis added to the sector’s momentum.
Buffett has increased his investment in Chevron (CVX - Free Report) by around 475.6% since the end of 2021. The above-mentioned was worth $25.9 billion at the end of the first quarter of 2022 versus its value of $4.5 billion at 2021-end (per a CNBC article). Notably, Chevron pays a 3.6% dividend. Buffett also scooped up 14% of oil giant Occidental Petroleum (OXY - Free Report) , worth more than $7 billion, in two weeks during March.
Against the bullish energy sector backdrop, let’s take a look at some energy ETFs that are worth adding for more returns: Invesco Dynamic Energy Exploration & Production ETFPXE, Vanguard Energy ETF (VDE - Free Report) , Fidelity MSCI Energy Index ETF (FENY), The Energy Select Sector SPDR Fund (XLE) and iShares U.S. Energy ETF (IYE) (read: Exxon, Chevron Lags Q1 Earnings, Up YoY: Energy ETFs in Focus).
Financial ETFs
Buffett has a reputation for favoring banks. He had invested $5 billion into Bank of America (BAC - Free Report) in 2011 to support the banking industry, per a CNBC article. Bank of America and American Express (AXP - Free Report) were two of Buffett’s other major holdings, worth $42.6 billion and $28.4 billion, respectively, at the end of the first quarter of 2022.
The shift toward a tighter monetary policy will push yields higher, thereby helping the financial sector. This is because rising rates will help in boosting profits for banks, insurance companies, discount brokerage firms and asset managers. The steepening of the yield curve (the difference between short and long-term interest rates) is likely to support banks’ net interest margins. As a result, net interest income, which constitutes a chunk of banks’ revenues, is likely to receive support from the steepening of the yield curve and a modest rise in loan demand. Notably, as the economy starts operating in full swing, the banking space will be able to generate more business.
Let’s take a look at some financial ETFs that can gain from the current environment: iShares U.S. Financial Services ETF (IYG - Free Report) , Invesco KBW Bank Portfolio (KBWB - Free Report) , The Financial Select Sector SPDR Fund (XLF) and ETFMG Prime Mobile Payments ETF (IPAY) (read: 5 ETF Strategies to Follow in May).
Technology ETFs
The technology giant Apple continues to be Berkshire’s biggest holding, worth $159.1 billion at the end of March 2022, accounting for about 40% of its equity portfolio (as stated in a CNBC article). According the same article, Buffett bought $600 million worth of Apple shares post a three-day fall in the stock last quarter. Berkshire has received regular dividends from Apple over the years, averaging nearly $775 million annually (per a CNBC article).
Berkshire announced a major stake in tech hardware stock HP Inc. (HPQ - Free Report) at the beginning of April. He scooped up nearly 121-million HP shares worth roughly $4.2 billion.
ETFs with the largest allocation to the tech titans have been in focus. TheTechnology Select Sector SPDR Fund (XLK - Free Report) , Vanguard Information Technology ETFVGT, MSCI Information Technology Index ETF (FTEC - Free Report) , iShares US Technology ETF (IYW) and iShares Russell Top 200 Growth ETF (IWY) have Apple as the top firm with a double-digit allocation (read: Apple Beats on Earnings, Issues Weak Outlook: ETFs in Focus).
Bitcoin ETFs
Not all the ETF areas have been hogging the spotlight for the right reasons since the Berkshire’s annual meeting. This area of investment that has been historically criticized by Buffett and Berkshire Hathaway Vice Chairman of Charlie Munger. Buffett believes that the bitcoins are incapable of producing anything or multiplying in comparison to tangible investment forms like farmland and rental properties, per a CNBC article.
Buffett even mentioned that “If you ... owned all of the bitcoin in the world and you offered it to me for $25, I wouldn’t take it,” Buffett said. “Because what would I do with it? I’ll have to sell it back to you one way or another. It isn’t going to do anything,” as stated in a CNBC article.
Munger expressed his views on cryptocurrency more bluntly by stating that “In my life I try and avoid things that are stupid and evil and make me look bad in comparison with somebody else — and Bitcoin does all three,” according to an article on Bankrate.com.
Thus, the stern views of Buffett might put ProShares Bitcoin Strategy ETFBITO in a tough spot.
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ETF Areas in the Spotlight Post Buffett's 2022 Meeting
Berkshire Hathaway Chairman Warren Buffett held his conglomerate’s first in-person annual meeting since 2019 on Apr 30. This was a widely attended event as many shareholders wanted to listen to their favorite investment guru, popularly known as the “Oracle of Omaha”. The meeting, also famously dubbed as “Woodstock for Capitalists” was attended by some big CEOs like Jamie Dimon, CEO of JPMorgan (JPM - Free Report) , Activision’s CEO Bobby Kotick as well as Apple’s (AAPL - Free Report) CEO Tim Cook, per a CNBC article.
Given the excitement about this meeting in the investment world, it definitely brought a lot of ETF areas into the spotlight. Let’s take a look at some of them:
Energy ETFs
Buffett has been focusing on the energy sector, which has been one of the best performing S&P 500 sectors in 2022. In fact, the energy space has remained a prime investment area holding the interest of market participants since the beginning of the year. Reopening global economies, accelerated coronavirus vaccine rollout and improving labor markets were adding to the strength in the sector. Going on, the rally in oil prices due to the Russia-Ukraine crisis added to the sector’s momentum.
Buffett has increased his investment in Chevron (CVX - Free Report) by around 475.6% since the end of 2021. The above-mentioned was worth $25.9 billion at the end of the first quarter of 2022 versus its value of $4.5 billion at 2021-end (per a CNBC article). Notably, Chevron pays a 3.6% dividend. Buffett also scooped up 14% of oil giant Occidental Petroleum (OXY - Free Report) , worth more than $7 billion, in two weeks during March.
Against the bullish energy sector backdrop, let’s take a look at some energy ETFs that are worth adding for more returns: Invesco Dynamic Energy Exploration & Production ETF PXE, Vanguard Energy ETF (VDE - Free Report) , Fidelity MSCI Energy Index ETF (FENY), The Energy Select Sector SPDR Fund (XLE) and iShares U.S. Energy ETF (IYE) (read: Exxon, Chevron Lags Q1 Earnings, Up YoY: Energy ETFs in Focus).
Financial ETFs
Buffett has a reputation for favoring banks. He had invested $5 billion into Bank of America (BAC - Free Report) in 2011 to support the banking industry, per a CNBC article. Bank of America and American Express (AXP - Free Report) were two of Buffett’s other major holdings, worth $42.6 billion and $28.4 billion, respectively, at the end of the first quarter of 2022.
The shift toward a tighter monetary policy will push yields higher, thereby helping the financial sector. This is because rising rates will help in boosting profits for banks, insurance companies, discount brokerage firms and asset managers. The steepening of the yield curve (the difference between short and long-term interest rates) is likely to support banks’ net interest margins. As a result, net interest income, which constitutes a chunk of banks’ revenues, is likely to receive support from the steepening of the yield curve and a modest rise in loan demand. Notably, as the economy starts operating in full swing, the banking space will be able to generate more business.
Let’s take a look at some financial ETFs that can gain from the current environment: iShares U.S. Financial Services ETF (IYG - Free Report) , Invesco KBW Bank Portfolio (KBWB - Free Report) , The Financial Select Sector SPDR Fund (XLF) and ETFMG Prime Mobile Payments ETF (IPAY) (read: 5 ETF Strategies to Follow in May).
Technology ETFs
The technology giant Apple continues to be Berkshire’s biggest holding, worth $159.1 billion at the end of March 2022, accounting for about 40% of its equity portfolio (as stated in a CNBC article). According the same article, Buffett bought $600 million worth of Apple shares post a three-day fall in the stock last quarter. Berkshire has received regular dividends from Apple over the years, averaging nearly $775 million annually (per a CNBC article).
Berkshire announced a major stake in tech hardware stock HP Inc. (HPQ - Free Report) at the beginning of April. He scooped up nearly 121-million HP shares worth roughly $4.2 billion.
ETFs with the largest allocation to the tech titans have been in focus. The Technology Select Sector SPDR Fund (XLK - Free Report) , Vanguard Information Technology ETF VGT, MSCI Information Technology Index ETF (FTEC - Free Report) , iShares US Technology ETF (IYW) and iShares Russell Top 200 Growth ETF (IWY) have Apple as the top firm with a double-digit allocation (read: Apple Beats on Earnings, Issues Weak Outlook: ETFs in Focus).
Bitcoin ETFs
Not all the ETF areas have been hogging the spotlight for the right reasons since the Berkshire’s annual meeting. This area of investment that has been historically criticized by Buffett and Berkshire Hathaway Vice Chairman of Charlie Munger. Buffett believes that the bitcoins are incapable of producing anything or multiplying in comparison to tangible investment forms like farmland and rental properties, per a CNBC article.
Buffett even mentioned that “If you ... owned all of the bitcoin in the world and you offered it to me for $25, I wouldn’t take it,” Buffett said. “Because what would I do with it? I’ll have to sell it back to you one way or another. It isn’t going to do anything,” as stated in a CNBC article.
Munger expressed his views on cryptocurrency more bluntly by stating that “In my life I try and avoid things that are stupid and evil and make me look bad in comparison with somebody else — and Bitcoin does all three,” according to an article on Bankrate.com.
Thus, the stern views of Buffett might put ProShares Bitcoin Strategy ETF BITO in a tough spot.