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Invest Like Warren Buffett With These ETFs

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These funds offer up Buffett-like exposure but at a fraction of the risk and overall cost as Berkshire Hathaway.

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Warren Buffett is widely regarded as one of the greatest investors of all-time, and for good reason. The 'Oracle of Omaha' has built up the one time struggling textile manufacturer of Berkshire Hathaway (NYSE:BRK.A) into a global behemoth with investments in a variety of industries and sectors.

Buffett's incredible track record is best demonstrated by the rise of Berkshire Hathaway's stock price over the years; the security was trading around $340 in 1980 and is now well over $120,000/share today. Meanwhile, since mid-1990, an investment in BRK.A would have added about 1700% compared to an S&P 500 (INDEXSP:.INX) return of roughly 300% in the same time period.

Clearly, Warren Buffett has been able to perform quite well over a very long time period, further adding to his mystique and overall legend. This has led many investors to apply Buffett-like strategies to their own personal portfolios as well, hoping that the deep value strategies of Buffett would rub-off on their overall returns.

In order to tap into these techniques, investors can certainly buy up Berkshire Hathaway shares as a proxy for Buffett's methodology. Yet one has to wonder if this is still the best strategy, given how large Berkshire has become. After all, it could be argued that Buffett, thanks to the size of his firm, can no longer apply his strategies as he once could when Berkshire was much more nimble.

Warren can now only make large bets in order to truly move the needle, a situation which has undoubtedly hurt the investor's impressive returns. In fact, a recent study suggested that in the '00s Buffett didn't add any alpha at all, a far cry from the nearly 19% alpha that he generated for Berkshire in 1956-1968 and the 'golden age' of Buffett's performance in the 1977-1981 period in which he added nearly 30% a year in excess gains.

Given this trend, investors may be looking for another way to apply Buffett-like strategies to their portfolios without the clear issues that Berkshire is facing. Warren is no spring chicken at this point anyway, so why take on that added risk of his retirement (or worse) when it is very easy to apply his ideas to the broader stock market without Berkshire's help.

One easy way to do this could be by using a number of specialized ETFs in order to tap into the heart of Buffett's philosophy. These funds offer up Buffett-like exposure but at a fraction of the risk and overall cost as Berkshire, and furthermore, without the overhang of Warren's succession plans as well.

With this backdrop, any of the following three ETFs could make for excellent ways to invest like Buffett from a sector perspective. The Oracle has definitely developed a few favorite industries over the past few decades and we believe that the funds highlighted below offer excellent targeted exposure to some of Warren's favorite segments making them great ways for ETF investors to invest like Warren Buffett:

Wide Moat Investing

Arguably Buffett's most famous investing strategy is to go after so-called 'wide moat' businesses. This type of investing consists of targeting firms that have easily defendable positions thanks to their inherent businesses, strategies, or other market factors.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
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