Billionaires Can't Get Enough of This ETF in 2024. Is It Right for You? | The Motley Fool (2024)

Even the top investors put their money in index funds.

Some of the wealthiest people in the world are professional investors. Billionaires like Warren Buffett, Ray Dalio, Bill Ackman, and Ken Griffin have made their fortune by getting others to invest with them and making smart investments.

However, while many of them are regarded as financial wizards, often their investments are utterly pedestrian. In fact, a number of billionaire investors count S&P 500 index funds among their top holdings. Among those are Buffett's Berkshire Hathaway, Dalio's Bridgewater, and Griffin's Citadel.

An S&P 500 exchange-traded fund (ETF) is the easiest way to get exposure to the broad market. You can simply buy and hold one investment that will track with the S&P 500, an index of 500 large-cap U.S. stocks, that is often regarded as "the stock market" even though it doesn't include every publicly traded company.

It's easy to see why S&P 500 index funds are so popular with the billionaire investor class. The S&P 500 has a long history of delivering strong returns, averaging 9% annually over 150 years. In other words, it's hard to find an investment with a better track record than the U.S. stock market.

It's also an easy investment to own. The S&P 500 is typically the benchmark that hedge funds try to beat, but no one will look foolish owning an S&P 500 ETF, and it's a good place to park your money until you have a better idea.

The billionaires that own the S&P 500

Warren Buffett is probably the most famous investor in the world, and he's also a big advocate of the S&P 500, saying it's always smart to bet on America. In fact, he's requested that 90% of his personal wealth be put in an S&P 500 index fund when he dies.

Perhaps, it's not a big surprise then that Berkshire Hathaway owns S&P 500 index funds. Buffett's conglomerate owns both the Vanguard S&P 500 ETF (VOO -1.36%) and the SPDR S&P 500 ETF (SPY -1.38%), owning nearly $17 million of each. Each one represents a paltry 0.01% of Berkshire's stock portfolio, but it's still no accident that they're there. Berkshire has owned them since 2019.

Ray Dalio's Bridgewater Associates is another billionaire-backed hedge fund that owns the S&P 500. Bridgewater's second-biggest holding is the iShares Core S&P 500 ETF (IVV -1.40%) with $878 million invested; the SPDR S&P 500 ETF is also a top-10 holding, making up $426 million of the portfolio.

Ken Griffin's Citadel Advisors is another big backer of the S&P 500. It counts the SPDR S&P 500 ETF as its third-biggest stock holding with just over $1 billion invested as of the end of the third quarter, and it also owns the Vanguard S&P 500 Fund. Citadel first bought the SPDR fund in 2014, and added nearly $400 million more to the ETF in the third quarter.

Is the S&P 500 ETF right for you?

There's another reason an S&P 500 index fund might be such a popular choice right now for even the top investors. There's a lot of uncertainty in the market these days.

Some investors think the economy is headed for a recession, as JPMorgan Chase CEO Jamie Dimon recently warned. Others believe that a new bull market has begun and that interest rates will soon fall, which is bullish for stocks. Bridgewater's Dalio even said that cash was worth holding, which helps maximize flexibility, after formerly calling it "trash."

No one knows for sure where the market is headed this year, but owning the S&P 500 over the long term has been a smart move for more than 100 years. Buying one of these ETFs is about the easiest move you can make as an investor, and it could be the smartest one as well. After all, as you can see from the list above, even billionaires count on the S&P 500 to build wealth.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, JPMorgan Chase, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

Billionaires Can't Get Enough of This ETF in 2024. Is It Right for You? | The Motley Fool (2024)


What are the best ETFs for 2024? ›

Best ETFs as of April 2024
TickerFund name5-year return
SMHVanEck Semiconductor ETF35.02%
SOXXiShares Semiconductor ETF30.70%
XLKTechnology Select Sector SPDR Fund24.57%
IYWiShares U.S. Technology ETF24.09%
1 more row
Mar 29, 2024

What is the best ETF to buy right now? ›

Invest in stocks, fractional shares, and crypto all in one place.
  • ProShares Bitcoin Strategy ETF (BITO)
  • Invesco QQQ Trust (QQQ)
  • Vanguard Information Technology ETF (VGT)
  • VanEck Semiconductor ETF (SMH)
  • Invesco S&P MidCap Momentum ETF (XMMO)
  • SPDR S&P Homebuilders ETF (XHB)
  • Invesco S&P 500 GARP ETF (SPGP)
Apr 3, 2024

Why does Dave Ramsey say not to invest in ETFs? ›

One of the biggest reasons Ramsey cautions investors about ETFs is that they are so easy to move in and out of. Unlike traditional mutual funds, which can only be bought or sold once per day, you can buy or sell an ETF on the open market just like an individual stock at any time the market is open.

Can an ETF become worthless? ›

Mythical risk: losing your entire investment

If you diversify across all sectors and countries through an ETF like IWDA, it's very, very unlikely your investment will become worthless. Because it would mean that all major companies in the world have gone bankrupt.

What is the best investment in 2024? ›

Overview: Best investments in 2024
  1. High-yield savings accounts. Overview: A high-yield online savings account pays you interest on your cash balance. ...
  2. Long-term certificates of deposit. ...
  3. Long-term corporate bond funds. ...
  4. Dividend stock funds. ...
  5. Value stock funds. ...
  6. Small-cap stock funds. ...
  7. REIT index funds.

What are the top 5 ETFs to buy? ›

Top 7 ETFs to buy now
ETFTickerAssets Under Management (AUM)
Vanguard S&P 500 ETF(NYSEMKT:VOO)$435.2 billion
Invesco QQQ Trust(NASDAQ:QQQ)$259.6 billion
Vanguard Growth ETF(NYSEMKT:VUG)$118.8 billion
iShares Core S&P Small-Cap ETF(NYSEMKT:IJR)$79.8 billion
3 more rows
Apr 1, 2024

Should I wait to invest in ETFs? ›

Should you invest in ETFs? Since ETFs offer built-in diversification and don't require large amounts of capital in order to invest in a range of stocks, they are a good way to get started. You can trade them like stocks while also enjoying a diversified portfolio.

What is the safest ETF to buy? ›

1. Vanguard S&P 500 ETF (VOO -1.24%) Legendary investor Warren Buffett has said that the best investment the average American can make is a low-cost S&P 500 index fund like the Vanguard S&P 500 ETF.

How many ETFs should I have in my portfolio? ›

Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification.

Does Warren Buffett believe in ETFs? ›

Warren Buffett has long recommended the S&P 500 index fund and ETF, and through his holding company Berkshire Hathaway, he also owns two of these types of investments: the Vanguard S&P 500 ETF (NYSEMKT: VOO) and the SPDR S&P 500 ETF Trust (NYSEMKT: SPY).

What does Dave Ramsey say to invest your money in? ›

What should you invest in inside your 401(k) and Roth IRA? There are many different types of investments to choose from, but Ramsey says mutual funds are the way to go! Mutual funds let you invest in a lot of companies at once, from the largest and most stable to the newest and fastest growing.

Can you retire a millionaire with ETFs alone? ›

Investing in the stock market is one of the most effective ways to generate long-term wealth, and you don't need to be an experienced investor to make a lot of money. In fact, it's possible to retire a millionaire with next to no effort through exchange-traded funds (ETFs).

Has an ETF ever gone to zero? ›

It is unlikely for its asset to go up 100% in a single day and so, an ETF can't become zero. An ETF follows a particular index and the securities are present at the same weight in it. So, it can be zero when all the securities go to zero.

Why I don't invest in ETFs? ›

Low Liquidity

If an ETF is thinly traded, there can be problems getting out of the investment, depending on the size of your position relative to the average trading volume. The biggest sign of an illiquid investment is large spreads between the bid and the ask.

What happens to my ETF if Vanguard fails? ›

The securities that underlie the funds are held by a custodian, not by Vanguard. Vanguard is paid by the funds to provide administration and other services. If Vanguard ever did go bankrupt, the funds would not be affected and would simply hire another firm to provide these services.

What is the best performing ETF in last 5 years? ›

100 Highest 5 Year ETF Returns
SymbolName5-Year Return
IYWiShares U.S. Technology ETF23.14%
URAGlobal X Uranium ETF23.06%
NAILDirexion Daily Homebuilders & Supplies Bull 3X Shares22.85%
XSDSPDR S&P Semiconductor ETF22.84%
93 more rows

What is the best ETF for long term growth? ›

7 Best Long-Term ETFs to Buy and Hold
ETFAssetsExpense ratio
Schwab U.S. Small-Cap ETF (SCHA)$16 billion0.04%
Invesco QQQ Trust (QQQ)$249 billion0.20%
Vanguard High Dividend Yield Index ETF (VYM)$51 billion0.06%
Vanguard Total International Stock ETF (VXUS)$63 billion0.07%
3 more rows
Feb 16, 2024

Which ETF has the best 10 year return? ›

Best ETFs 10 Years
SymbolETF Name10y Chg 4-2-24
PSIInvesco Semiconductors ETF786%
METARoundhill Ball Metaverse ETF717%
XSDSPDR S&P Semiconductor ETF617%
XLKSPDR Technology Sector ETF558%
17 more rows

What are the best ETFs in February 2024? ›

In February 2024, the top-performing stock ETFs included equity technology fund VanEck Crypto & Blockchain Innovators UCITS ETF (DAPP) and iShares Blockchain Technology UCITS ETF (BLKC). The month's worst performers included Sprott Uranium Miners UCITS ETF Accumulating (URNM) and AuAg ESG Gold Mining UCITS ETF (ESGO).


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