In a 2013 Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) shareholder letter, Warren Buffett mentioned where he wanted his wife’s inheritance invested after his death: 10% in Treasury bills and 90% in a low-cost S&P 500 fund.
The three words that came next were as close to an explicit endorsement for an ETF as you’ll find: “I suggest Vanguard’s.” That was written into his estate plan, the instructions of a man who has become known as one of the greatest investors of all-time
He’s suggesting that one of the best long-term investments one can make is the Vanguard S&P 500 ETF (NYSEMKT: VOO). Why the S&P 500 works The S&P 500 is designed to provide a broad cross-section of the U.S. economy. As companies grow larger, they gain more influence in the index.
While the artificial intelligence (AI) revolution continues to expand the tech sector, the index maintains meaningful exposure to the 11 primary S&P sectors. That means investors can gain access to what’s effectively the entire U.S. economic growth engine within a single ticker. The Vanguard S&P 500 ETF is one of the cheapest ways to own it with an expense ratio of just 0.03%.