Warren Buffett Owns 1 Vanguard Index Fund That Could Soar by 150%, According to a Top Wall Street Analyst

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Warren Buffett is the longtime CEO of Berkshire Hathaway, where he oversees a $295 billion portfolio of 45 publicly traded stocks and securities. His conglomerate also wholly owns an array of businesses, and has a $325 billion cash stockpile ready to be put to work when he and his lieutenants see worthwhile investing opportunities.

Since Buffett took the helm in 1965, his investment decisions have propelled Berkshire Hathaway’s stock to a compound annual return of 19.8% through 2023. That crushes the average annual return of 10.2% in the S&P 500 index over the same period.

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But keep in mind that Buffett is a full-time investing professional, and he knows the average retail investor would struggle to come close to replicating his success. That’s why he often recommends that small investors buy exchange-traded index funds (ETFs) instead. Berkshire currently holds stakes in two of them: The Vanguard S&P 500 ETF and the SPDR S&P 500 ETF Trust.

Both funds directly track the performance of the S&P 500 index, but the Vanguard ETF might be the better choice for you because of its low cost. And to enhance the argument in favor of this simple and easy investment choice, one Wall Street analyst predicts it could deliver a whopping 150% return by 2030.

Image source: The Motley Fool.

The S&P 500 is an index of 500 of the largest U.S. companies across all 11 sectors of the economy, so it’s quite diversified. There are strict criteria for companies to earn their initial inclusion into the index — among them, they must have market capitalizations of at least $18 billion, and they must be profitable on a trailing 12-month basis.

Even then, entry is granted at the discretion of a special committee that adjusts the index’s components once per quarter, ensuring only the highest-quality companies make the cut. The Vanguard S&P 500 ETF tracks the performance of the S&P 500 by holding the same stocks and maintaining similar weightings.

The ETF’s expense ratio — the proportion of investors’ funds that they pay each year to cover management costs — is just 0.03%. That makes it one of the cheapest ETFs in the world — the SPDR S&P 500 ETF Trust, for example, has an expense ratio of 0.09%. That’s still low, but it’s three times more expensive to own than the Vanguard fund. Higher expense ratios can negatively impact investors’ returns over the long term.

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