Following the Lead of Billionaire Investors
When it comes to investing, it’s natural to wonder what strategies the most successful investors use to grow their wealth. Two notable billionaires, Israel “Izzy” Englander and Warren Buffett, have been found to have a common investment in their portfolios – the SPDR S&P 500 ETF Trust (NYSEMKT: SPY).
A Diversified Portfolio
Englander’s Millennium Management hedge fund has a significant stake in the SPDR S&P 500 ETF Trust, with over 2.49 million additional shares purchased in the third quarter of 2024. This ETF tracks the performance of the S&P 500 Index, comprising 503 stocks across 11 sectors. The top five holdings, including Apple, Nvidia, Microsoft, and Meta Platforms, make up roughly 26% of the total portfolio.
Performance Matters
The SPDR S&P 500 ETF Trust has delivered an impressive average annual gain of 10.41% since its inception in January 1993. In 2024, it has seen a remarkable 27% increase, with an even higher total return. Englander’s interest in this ETF is likely driven by its strong performance and diversification benefits.
A Surprising Move
Interestingly, Millennium Management’s second-largest holding is another S&P 500 index ETF – the iShares Core S&P 500 ETF. However, Englander reduced his hedge fund’s position in this ETF by roughly 20% in Q3, despite its lower annual expense ratio compared to the SPDR ETF.
What Does This Mean for Investors?
Investing in S&P 500 ETFs can be a smart strategy for long-term growth. However, it’s essential to consider the costs associated with these investments. The Vanguard S&P 500 ETF (NYSEMKT: VOO) offers a lower expense ratio of 0.03%, making it an attractive alternative to the SPDR ETF. The iShares Core S&P 500 ETF, which Englander sold in Q3, also boasts a low expense ratio of 0.03%.
Takeaways from Billionaire Investors
By examining the investment strategies of successful billionaires like Englander and Buffett, individual investors can gain valuable insights. Diversification, performance, and cost are key factors to consider when selecting an ETF. By following their lead, investors can make informed decisions to grow their wealth over time.
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