Berkshire Hathaway CEO Warren Buffett was, as usual, on to something when the company bought Vanguard’s S&P 500 ETF (VOO) a few years ago.
Since then, the exchange-traded fund has gradually become a darling of retail investors, surpassing $100 billion in net cash flow for the first time this year.
“Vanguard’s ownership structure is unique in the industry: we are owned by our funds, which in turn are owned by the funds’ shareholders. So we have no divided loyalties; we are solely focused on helping investors achieve their goals to achieve.” a Vanguard spokesperson told FOX Business.
The ETF, which mirrors the S&P 500 Index, is “more suitable for long-term goals where growing your money is essential,” according to the company’s summary.
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The S&P 500 is up 27% this year, surpassing the 6,000 level for the first time.
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Long-term investors are likely to stick with VOO over rival SPDR S&P 500 ETF Trust (SPY), which Buffett also owns, according to 13F filings.
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Both funds count Apple, Nvidia and Microsoft as their highest weightings, while Tesla and Broadcom are the lowest for VOO, and Broadcom and Alphabet for SPY.
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“Vanguard just has this reputation and, you know, it has a very dedicated investor base that just buys Vanguard funds. And they tend to be long-term oriented. They put money into those Vanguard funds, day after day, week after week So it benefits from that,” Sumit Roy, senior ETF analyst for ETF.com, told FOX Business.
The company, founded by legendary investor John “Jack” Bogle, is best known for creating index funds.
VOO, which burst onto the scene in 2010, has $588 billion in assets and an expense ratio of 0.03%. Although SPY’s expense ratio is higher at 0.0945%, with over $688 billion in assets, it attracts nimble investors.
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“The investor base is much more diverse. You have some long-term investors, but you have a lot of traders, you have hedge funds, people coming in and out trying to time the market. So the flow, the pattern of flows is a little bit different than SPY. We see big outflows. Sometimes we see big inflows,” Roy said.
Founded in 1993, SPY was the first ETF to trade on a national exchange.
Source of original article: One of Warren Buffett’s favorite ETFs attracts $100 billion for the first time
