Top Four Mutual Investment Fund Warren Buffet Might Purchase
There has been a lot of investing success stories featured online. One of which is the iconic American investor known as Oracle of Omaha – Warren Buffett. He is recognized by his values on investing techniques that enabled him to amass more than $60 billion worth of his investments. Berkshire Hathaway is a holding company that consistently brings him as one of the world’s richest people.
During the year 2014, Buffett notified his estate trustees to make a 10% cash investment within government bonds with 90% low-cost S&P 500 index fund. Let us enlist and elaborate the top 4 mutual investment fund that Buffet might have purchased.
Vanguard Short-Term Treasury Fund Investor Shares
With a recommendation to invest in a low-cost fund tied with the S&P 500 Index, Buffett added a recommendation to invest a small portion of cash with short-term government bonds. Vanguard Short-Term Treasury Fund Investor Shares was issued by Vanguard in 1991 low-cost exposure. This aims to provide low-cost publicity for the U.S. short-term government bond market. Vanguard Fixed Income Group managed this part with 0.2% low net ratio.
This Vanguard fund also aims to provide their investors’ income limited to the degree of volatility. To achieve their goal, the Fund endeavors will invest about 80% of their total net assets to the U.S. short-term Treasury securities. The fund offers a low degree of interest rate risk with an estimated effective duration of 2-3 years. That’s the reason why the fund also offers a moderate thirty-day SEC yield 0.62 since September 11, 2015.
On August 31, 2015, the fund generated 4.32% average annual return since its issuance. In 2015, their 10-year data showed a low degree of volatility which presents satisfactory returns to their risk-adjusted basis. With the recommendation to find a short-term government bond, Buffett might have chosen to invest with Vanguard Short-Term Treasury Fund Investor Shares.
Vanguard Value Index Fund Investor Shares
This started on November 2, 1992 with the support of Vanguard. The fund’s goal is to give investment results in analyzing the performance of Center for Research in Security Prices (CRSP) U.S. Large Cap Value Index – their benchmark index. On August 31, 2015, the fund had a 9.09% average annual return since 1992.
In order to reach their goal, the fund applies an index approach, investing their entire asset in stock that includes their benchmark index. The fund’s management is Vanguard Equity Investment group with charges of 0.23% expense ratio. This is close to 80% average expense ratio of mutual funds.
On 2015, their 15th-year data, the fund holds a beta in contrast with the standard index. In connection with S&P 500 Index, the fund came close to a perfect degree of similarity to the S&P 500 Index, over performing the 1.19% index. With high correlation to the S&P 500 Index, Warren Buffett might have also considered investing to Vanguard Value Index Fund Investor Shares.
Fidelity Spartan 500 Index Investor Shares
This is another mutual investment fund with low-cost exposure to the S&P 500 Index. It was issued on February 17, 1988 by Fidelity to achieve their investment objective with at least 80% investment from their total net assets within common stocks containing the S&P 500 Index. Geode Capital Management, LLC, the fund’s investment advisor applies a passive approach to help minimize its cost. As a result, the fund generated a turnover ratio of 4% with a low net expense charge ratio of 0.095%. As of October 2015, Fidelity Spartan 500 Index Investor Shares held 502 stocks in their portfolio and an estimated total net asset of $7.76 billion.
When it comes to a modern portfolio approach, the fund is appropriate and has a same degree of volatility as the S&P 500 Index. It is quite obvious that Buffett have greater favor to have Vanguard funds. But Fidelity Spartan 500 Index Investor Shares having low expense ratio with indexing approach might be included to the top investments of the Oracle of Omaha.
Vanguard 500 Index Fund Investor Shares
Among the top mutual investment fund, Vanguard 500 Index Fund Investor Shares is the most-effective offering with exposure to the U.S. large-capitalization stocks. It began on August 31, 1976, aiming to track the performance of the S&P 500 Index, their benchmark index. The fund will invest a substantial portion of their total net assets in stocks to achieve their goal. On December 2014, the fund had a 2.7% turnover ratio and charges 0.17% net expense ratio.
Since the fund trails the S&P 500 index with a beta against the index, Buffett might have chosen Vanguard 500 Index Fund Investor Shares.