3 ETFs in Focus on Berkshire's Earnings Beat
Warren Buffett is undoubtedly one of the greatest investors of all time. His track record with picking companies below their intrinsic value and delivering outsized returns, is second to none. (Read: Invest like Warren Buffett with these ETFs)
Buffett’s time-tested investing strategies yet again delivered solid results. His flagship company Berkshire Hathaway reported net earnings of $4.5 billion for the second quarter of 2013, up 46% from the same quarter of 2012.
Operating earnings (excluding investments and derivative gains/losses) came in at $3.9 billion or $2,384 up from $2,252 in the prior-year quarter and substantially ahead of the street estimates.(Read: 3 Top ranked ETFs for the earnings season)
Investment income from the insurance operations increased 7.1% to $1.14 billion, while operating profit at the company's noninsurance units climbed 7.8% to $2.37 billion.
The conglomerate that includes insurance, railroads companies and a wide range of consumer products businesses had reported 41% increase in earnings for the first quarter. (Read: Beat the market with ‘pure’ ETF strategies)
For investing like Buffet, investors could look at some of the ETFs that include Berkshire shares in a large proportion in their portfolio.
RevenueShares Financials Sector Fund (RWW)
RWW holds the same securities as the S&P 500 Financials Index but these 81 securities in the fund are ranked by their revenue, instead of market capitalization. The fund is re-balanced quarterly to reflect updated revenue data.
Berkshire Hathaway is the top holding of the fund with 11.6% of the asset base, followed by JP Morgan (7.5%) and Bank of America (6.8%).
The index and the fund have generally been outperforming their market cap weighted cousin but the outperformance comes with slightly higher expense ratio of 49 basis points.
RWW is currently a Zacks Rank #2 (Buy) ETF.
S&P Financial Select Sector SPDR Fund (XLF)
The largest and the cheapest fund within the financials space--XLF tracks S&P Financial Select Sector Index. Launched in December 1998, this fund has attracted more than $16.9 billion in assets so far.
The product holds 82 securities in its basket, with top allocations to Wells Fargo (8.5%), Berkshire Hathaway (8.4%) and JP Morgan (8.4%). It charges an expense ratio of just 18 basis points and has a dividend yield of 1.5% currently.
XLF is currently a Zacks Rank #1 (Strong Buy) ETF.
iShares U.S. Financials ETF (IYF)
The fund which made its debut in May 2000 currently has $1.3 billion in AUM, invested in 261 securities.
Berkshire is among the top three holdings with 6.4% of the asset base; Wells Fargo (6.5%) and JP Morgan (6.4%) are the other two. Banks take the largest share of the basket with 33.3% of the assets, followed by Financial Services (24.7%) and Non-life insurance (18.6%)
The product charges 46 basis points in annual fees and pays dividends at 1.3% annual yield.
IYF is currently a Zacks Rank #2 (Buy) ETF.
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