The highlight of this segment of the Berkshire AGM comes towards the end when chairperson Warren Buffett delivers a masterclass in why Exchange Traded Funds are always going to outperform actively managed portfolio managers.
It’s a subject about which the Oracle of Omaha is hugely passionate – and one where he took a $1m personal bet to prove the point. And prove it he certainly has. Eight years into a ten year challenge against the best Wall Street could offer, the performance by Buffett’s simple S&P500 Index tracker is smashing Hedge Funds – by a staggering 40 percentage points (65% vs 22%).
Also in this segment you’ll find Buffett and Munger’s position on the controversy around their close ally, the Sequoia Fund, which invested 30% of its clients’ assets into the Valeant “chain letter” scheme; reasons why the Berkshire Hathaway conglomerate will never be dismantled; and why most big banking stocks are likely to be poor investments into the future. – Alec Hogg