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The legendary investor Warren Buffett – chair and CEO of Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) – is famous for his decades-long streak of market-beating returns. However, he is also famous for his coyness. He rarely gives direct investment advice.
Instead, Buffett is well-known for his parable-filled preaching on the concepts of successful investing. He has famously only ever explicitly recommended one investment though. And it’s not even his own company Berkshire. Instead, Buffett once told us that most people should just stick with a low-cost S&P 500 index fund.
However, although this might be true, the fact remains that Buffett’s investing style at Berkshire has resulted in the company smashing the returns of the S&P 500 Index over time.
To prove it, Buffett included a side-by-side comparison in his 2020 letter to shareholders earlier this year. Buffett told us that from 1964-2020, the S&P 500 returned a very nice 23,454% (or an average of 10.2% per annum). But Berkshire instead has delivered an eye-watering 2,810,526% (or 20% p.a.) return.
So perhaps his investment style is at least worth trying to replicate.
And that’s exactly what the VanEck Vectors Wide Moat ETF (ASX: MOAT) tries to do.
A Buffett-inspired ASX ETF in MOAT
This ASX exchange-traded fund (ETF) tracks an index that actively tries to identify a “diversified portfolio of attractively priced US companies with sustainable competitive advantages”. This strategy is right out of the Buffett playbook. Warren Buffett even originally coined the term ‘moat’ to describe the effects of a sustainable competitive advantage.
So MOAT holds a relatively concentrated portfolio of (currently) 49 US shares. You’ll find names like Facebook Inc and Alphabet Inc among its current holdings. As well as Amazon.com Inc, the Coca Cola Co and Wells Fargo & Co. Many of these companies are also holdings of Berkshire Hathaway right now. In fact, MOAT even currently holds Berkshire Class B shares as well.
But what of performance. It’s no good trying to replicate Buffett’s investing prowess if you can’t bring home the bacon at the end of the day.
Well, MOAT has returned a very pleasing 39.27% over the 12 months to 30 July 2021. It has also returned a robust 27.9% in the 6 months to 31 July as well. Since its inception in June 2015, this ASX ETF has averaged an annual performance of 21.05% per annum. That even exceeds Berkshire’s long-term annual average return of 20%.