Billionaires can’t get enough of this ETF in 2024. Is it right for you in 2025?

Billionaire hedge fund managers are known for their investment acumen, and many have reached the top of their industry by consistently outperforming the market.

However, running a hedge fund is not just about picking stocks. It may surprise you to learn that many large investors buy shares of ETFs, including the most popular type of index fund, which is… Standard & Poor’s 500 Index fund. And when it comes to S&P 500 index funds, the biggest is Vanguard S&P 500 ETF (NYSEMKT: flight) With net assets of $1.37 trillion.

It’s also a top choice even among billionaire fund managers. Among those who own the Vanguard S&P 500 ETF are Ken Griffin and Warren Buffett’s Citadel Advisors. Berkshire HathawayLeon Cooperman, and a number of other billionaires own shares in other S&P 500 ETFs such as SPDR S&P 500 ETF (NYSE: SPY) and iShares Core S&P 500 ETF (NYSEMKT:IVV).

Here’s what they find so attractive about this investment option — and why it might be a good one for you, too.

Bull statue looking at a stock chart. — Image source: Getty Images.

Whether you’re a novice or experienced investor, the Vanguard S&P 500 ETF is an easy addition to your portfolio, a low-cost option with… Expense ratio By only 0.03%

Tracking the S&P 500 Index, the Vanguard S&P 500 ETF holds 500 of the largest U.S. large-cap stocks on the stock market. index manager, Standard & Poor’s GlobalIt rebalances every three months to ensure it reflects the best stocks available. Poor performing companies are excluded and emerging companies are brought in. This year, the index added stocks such as: Palantir and Work day Because it is increasingly leaning towards the technology sector.

Regular rebalancing is one reason the S&P 500 has a long record of achieving strong results, averaging 10.5% since its introduction in 1957. Another reason for its success is the dynamism of the US economy, which continues to grow even simultaneously. When so much of the world struggled.

Billionaire investors have also praised the S&P 500 ETF, and Berkshire Hathaway CEO Warren Buffett has advised that for most investors, the best thing to do is buy an S&P 500 index fund. He also wants his holdings to invest 90% of his wealth in a low-slung S&P 500 index fund. Cost after his death.

The S&P 500 offers almost something for everyone. The index contains a mix of growth stocks and value stocks, although these days the weighting is skewed more toward growth stocks as the technology sector has been on the rise. It also draws from each sector of the stock market, helping to ensure you are diversified and not over-exposed to any one sector.

It also offers a modest dividend yield of 1.2%, and the Vanguard S&P 500 ETF is currently trading at a P/E of 28.

Looking to 2025, signs point to another strong year for the S&P 500. The US economy has been resilient in the face of rising inflation and interest rates, and the threat of recession appears to have passed. On the other hand, unemployment rates remain low, GDP growth is strong, and the AI boom is at its peak. Investors also seemed excited about the impact the Trump administration, which could lead to lower taxes and less regulation, would have on the stock market and the S&P 500.

In general, an S&P 500 ETF like Vanguard’s deserves a place in almost any portfolio. The index fund has a long track record of strong growth. It’s less risky than picking individual stocks, and often even outperforms professional investors.

Warren Buffett famously made a bet with a hedge fund manager that an S&P 500 ETF would outperform a managed fund over a decade (starting in 2008), and Buffett won handily. If there is a lesson here, it seems that investing should not be over-thought. Buying an S&P 500 ETF is one of the easiest investment decisions you can make.

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*Stock Advisor returns as of December 30, 2024

Jeremy Bowman He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies, the Vanguard S&P 500 ETF, and Workday. The Motley Fool has Disclosure policy.

Billionaires can’t get enough of this ETF in 2024. Is it right for you in 2025? Originally published by The Motley Fool

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