Etfs Billionaires Recommend: Where The Rich Invest

The legendary investor Warren Buffett is known for his love of Apple, with a bet on the stock ballooning to $177 billion in value as of the third quarter of 2023. Billionaire investors like Buffett are often known for their stock-picking abilities, but many also invest in exchange-traded funds (ETFs). For example, Buffett's portfolio includes the Vanguard S&P 500 ETF and the SPDR S&P 500 ETF Trust. Ray Dalio, founder of Bridgewater Associates, the world's largest hedge fund, also has significant holdings in ETFs. So, which ETFs do billionaires recommend and invest in?

Billionaires' favourite ETFs

Billionaires like Warren Buffett and Ray Dalio are known for their stock-picking abilities, but they also invest in exchange-traded funds (ETFs). Here are some of their top choices and why they could be smart additions to your portfolio:

Warren Buffett's Favourite ETFs:

• Vanguard S&P 500 ETF (VOO): This ETF tracks the S&P 500 index, investing in 500 large-cap US companies. Buffett has called investing in the S&P 500 "a bet on American business," and it has produced average total returns of 10.2% since 1965. With an expense ratio of just 0.03%, it's a low-cost way to invest in American businesses.
• SPDR S&P 500 ETF Trust (SPY): Similar to VOO, this ETF also tracks the S&P 500 index but has a slightly higher expense ratio of 0.09%. It's another cheap way to gain exposure to the performance of 500 large US companies.

Ray Dalio's Favourite ETFs:

• IShares Core S&P 500 ETF (IVV): Like Buffett's choices, this ETF tracks the S&P 500 index and provides a low-cost way to invest in a broad range of US companies. Dalio's hedge fund, Bridgewater Associates, had about $1 billion invested in this ETF.
• IShares Core MSCI Emerging Markets ETF (IEMG): This ETF provides exposure to large- and mid-cap companies in emerging markets such as China, India, Taiwan, South Korea, and Brazil. It holds about 1,200 stocks, including Taiwan Semiconductor, Samsung, Tencent Holdings, and Alibaba Group. This ETF gives investors a way to tap into high-growth economies without the risk of picking individual stocks.

Other Billionaires' Favourite ETFs:

Other billionaires, like David Tepper and Stanley Druckenmiller, have also shown an interest in technology and artificial intelligence. Here are some of the ETFs they have invested in or that align with their investment strategies:

• Roundhill Magnificent Seven ETF (MAGS): This ETF invests in the "Magnificent Seven" stocks: Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla. It offers a focused approach to investing in some of the largest and most dominant tech companies.
• Technology Select Sector SPDR Fund (XLK): This ETF has a large exposure to Apple, with the company making up more than 20% of its assets. It's a strong pick for investors who want to follow Buffett's lead in investing in Apple.
• Vanguard Information Technology ETF (VGT) and MSCI Information Technology Index ETF (FTEC): These ETFs also have a significant exposure to Apple and other large technology companies. They are ranked highly by Zacks, making them compelling picks for investors.
• Global X Robotics & Artificial Intelligence ETF (BOTZ): This ETF aligns with Druckenmiller's focus on artificial intelligence and offers a way to invest in the AI and robotics sectors.
• VanEck Vectors Semiconductor ETF (SMH) and iShares Semiconductor ETF (SOXX): These ETFs provide exposure to the semiconductor sector, which includes chip stocks that Druckenmiller has invested in, such as Intel, Micron Technology, and Qualcomm.

Billionaires' large-cap picks

Billionaires Large-Cap Picks

Large-cap stocks are a group of stocks with a market capitalisation above $10 billion. They are often seen as a safe investment due to their size and established market presence. Here are some large-cap stocks that billionaires recommend and invest in:

The Magnificent Seven

A group of large-cap stocks, referred to as the "Magnificent Seven", includes Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN), Nvidia (NVDA), Meta Platforms (META), and Tesla (TSLA). These stocks have been performing strongly in recent years, and several billionaires have invested in them.

Apple (AAPL)

The legendary investor Warren Buffett has a large stake in Apple, with a bet on the stock ballooning to $177 billion in value. Apple is also the largest holding of the Buffett portfolio, valued at over $313 billion as of the third quarter of 2023. ETFs with the largest exposure to Apple, such as Technology Select Sector SPDR Fund XLK, Vanguard Information Technology ETF VGT, and MSCI Information Technology Index ETF FTEC, are recommended as compelling picks.

Meta Platforms (META), Microsoft (MSFT), Amazon (AMZN), Nvidia (NVDA), and Alphabet (GOOG)

Billionaire David Tepper believes in the continued strength of these tech titans. Five of these companies made it to his top five holdings, accounting for nearly half of his investment portfolio.

Alphabet (GOOG)

Stanley Druckenmiller also has a large stake in Alphabet, increasing his holdings in the company after its third-quarter earnings dip.

Roundhill Magnificent Seven ETF (MAGS)

This ETF offers investors precise exposure to the Magnificent Seven stocks. It has amassed $20 million in its asset base and charges 29 bps in fees per year.

Vanguard S&P 500 ETF (VOO) and SPDR S&P 500 ETF Trust (SPY)

These two ETFs are part of Warren Buffett's portfolio and are low-cost index funds that invest in the 500 companies that make up the popular benchmark index, aiming to replicate its performance over time. The Vanguard ETF has an expense ratio of 0.03%, while the SPDR ETF has an expense ratio of 0.09%.

IShares Core S&P 500 ETF (IVV) and iShares Core MSCI Emerging Markets ETF (IEMG)

These ETFs are owned by Bridgewater Associates, the world's largest hedge fund. The iShares Core S&P 500 ETF is similar to the Vanguard and SPDR ETFs, while the iShares Core MSCI Emerging Markets ETF offers exposure to large- and mid-cap companies in emerging markets like China, India, Taiwan, South Korea, and Brazil.

Vanguard Real Estate ETF (VNQ)

With assets of $36.8 billion and an expense ratio of 0.13%, this ETF is the leader among real estate ETFs. It holds over 150 REITs, including Prologis Inc., American Tower Corp., and Equinix Inc.

ARK Innovation ETF (ARKK)

Billionaire David Tepper has added positions in this actively managed fund, which invests in companies that benefit from disruptive technologies, such as DNA technologies, automation, robotics, artificial intelligence, and fintech innovation.

Global X Robotics & Artificial Intelligence ETF (BOTZ)

Stanley Druckenmiller has shifted his focus towards artificial intelligence, investing in companies like Nvidia, Intel Corp, Micron Technology, and Qualcomm Inc. The BOTZ ETF provides exposure to the AI and robotics sectors.

VanEck Vectors Semiconductor ETF (SMH) and iShares Semiconductor ETF (SOXX)

These ETFs provide exposure to the semiconductor sector and are recommended for investors who want to bet on chip stocks.

Vanguard Consumer Discretionary ETF (VCR) and Consumer Discretionary Select Sector SPDR Fund (XLY)

Billionaire Bill Ackman has shown a strong interest in the consumer discretionary sector, investing in companies like Lowe's Companies and Chipotle Mexican Grill. The VCR and XLY ETFs offer broad exposure to this sector.

Billionaires' AI and chip bets

Billionaires AI and Chip Bets

Billionaire investor Stanley Druckenmiller has shifted his focus to artificial intelligence (AI) and chips. He has significant investments in Nvidia, Intel Corp, Micron Technology, and Qualcomm Inc.

Global X Robotics & Artificial Intelligence ETF (BOTZ)

BOTZ is an ETF that invests in companies that benefit from robotics and AI. Nvidia is its top holding, and it also has investments in other chip companies such as Qualcomm. BOTZ has an expense ratio of 0.68% and offers diversified exposure to the expanding AI market.

VanEck Vectors Semiconductor ETF (SMH) and iShares Semiconductor ETF (SOXX)

These ETFs provide exposure to the semiconductor sector, which is crucial for AI development. They are popular choices among investors and have a Zacks ETF Rank #1.

Vanguard Information Technology ETF (VGT)

VGT is a well-diversified technology fund that includes Microsoft, Nvidia, and Broadcom as its top holdings. It has a low expense ratio of 0.10% and is one of the best all-purpose AI ETFs.

Fidelity MSCI Information Technology Index ETF (FTEC)

FTEC is similar to VGT and tracks the MSCI USA IMI Information Technology Index. It includes Microsoft, Apple, Nvidia, and Broadcom as its top holdings. FTEC has an expense ratio of 0.084%.

Defiance Quantum ETF (QTUM)

QTUM focuses on companies that enable quantum computing, which extends the capabilities of AI and machine learning. QTUM has an expense ratio of 0.40% and a year-to-date return of 13.6%.

Billionaires' consumer discretionary interest

Consumer discretionary stocks and ETFs have been among the most closely watched areas of the market this year. Billionaire investor Bill Ackman is one such individual who has shown a strong interest in the consumer discretionary sector, with substantial investments in Lowe's Companies (LOW) and Chipotle Mexican Grill (CMG).

Consumer discretionary companies produce and distribute non-essential goods and services, including automobiles, durable household goods, recreational supplies, textiles, apparel, hotels, restaurants, and entertainment companies.

• Vanguard Consumer Discretionary ETF (VCR): This ETF offers broad exposure to the consumer discretionary sector and is a good choice for investors looking to allocate capital to this sector. It has a low expense ratio of 0.10%.
• Consumer Discretionary Select Sector SPDR Fund (XLY): With assets of $13.4 billion, XLY is the largest consumer discretionary ETF in the US. It represents consumer discretionary stocks of the S&P 500 index, with Amazon.com (AMZN) as its largest holding, accounting for 24% of the fund's assets. It has a low expense ratio of 0.13%.
• Amplify Online Retail ETF (IBUY): This ETF focuses on multi-cap growth stocks in the consumer discretionary sectors of developed market economies. Its top holdings include Stitch Fix Inc. (SFIX) and Amazon.com Inc. (AMZN). It has an expense ratio of 0.65%.
• ProShares Online Retail ETF (ONLN): ONLN tracks the performance of retailers that primarily sell online, with Amazon.com Inc. (AMZN) and Alibaba Group Holding Ltd. (BABA) as its top holdings. It has an expense ratio of 0.58%.
• Roundhill BITKRAFT Esports & Digital Entertainment ETF (NERD): NERD provides exposure to the esports and digital entertainment industries, including companies like Modern Times Group MTG AB (MTG.B) and Tencent Holdings Ltd. (700:HKG). It has an expense ratio of 0.25%.
• Fidelity MSCI Consumer Discretionary Index ETF (FDIS): FDIS is a low-cost ETF that tracks the MSCI USA IMI Consumer Discretionary Index. It has more than 290 stocks in its portfolio, with Amazon.com (AMZN) as its largest holding. It has an expense ratio of 0.08%.

Billionaires' tech titan strength beliefs

Billionaires Tech Titan Strength Beliefs

Billionaire investor David Tepper believes in the enduring strength of tech titans. While he exited his position in Apple during the third quarter of 2023, he loaded up on other tech stocks. Five out of the seven stocks in the "Magnificent Seven" group—Meta Platforms, Microsoft, Amazon, Nvidia, and Alphabet—were among his top five holdings, accounting for nearly half of his investment portfolio.

Tech Titan Strength: The Magnificent Seven

The Magnificent Seven group of stocks includes Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla. These large-cap stocks have been responsible for a significant portion of the market's gains.

Billionaire Strategies: Focus on AI and Chips

Like Stanley Druckenmiller, another billionaire investor, Tepper has also shifted his focus towards artificial intelligence (AI), with significant investments in Nvidia. Druckenmiller has also been betting on other chip stocks, including Intel Corp, Micron Technology, and Qualcomm Inc.

ETFs for Tech Titan Exposure

To gain exposure to the strength of tech titans, investors can consider the following exchange-traded funds (ETFs):

• Roundhill Magnificent Seven ETF (MAGS)
• Technology Select Sector SPDR Fund (XLK)
• Vanguard Information Technology ETF (VGT)
• MSCI Information Technology Index ETF (FTEC)
• ARK Innovation ETF (ARKK)

These ETFs provide investors with access to a diversified portfolio of tech stocks, including some of the largest and most well-known companies in the world. By investing in these ETFs, investors can follow in the footsteps of billionaires like David Tepper and Stanley Druckenmiller, who recognize the potential for continued growth in the tech sector.

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