This Warren Buffett fund on Motif Investing is beating the stock market and Buffett’s own Berkshire Hathaway
Berkshire Hathaway, the investment holding company run by legendary investor Warren Buffett, reported its profits for the last three months last Friday. Buffett’s portfolio of holdings did well during the quarter but how did our own portfolio of Buffett stocks hold up?
In February, I grouped 13 of my favorite Warren Buffett stocks along with two exchange traded funds (ETF) in a fund on Motif Investing. Using Motif allows me to buy all 15 investments for one commission of $9.95 rather than buy each stock individually.
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Buffett saw earnings jump 25% in the second quarter versus the same time last year. Strong results by his insurance companies helped to compensate for weakness at his railroad BNSF Railway.
Since the beginning of February, shares of Buffett’s company have gained 14.8% and have beaten the stock market by almost one percent.
My own group of Warren Buffett stocks have beaten both and with a dividend yield that put cash in my pocket.
How did the Warren Buffett fund do it?
Warren Buffett Fund Review
The Warren Buffett Way on Motif Investing is up 16.1% so far this year, beating the stock market by 2.2% and even outperforming Buffett’s Berkshire Hathaway. It was beating the market by more than 4% for most of that time but the drop in oil prices hit some of my oil stocks over the last month.
Beyond the double-digit price return, I’ve also received a 1% dividend return over the last four months. That amounts to about 3% a year which is higher than the 2% dividend return on the overall stock market.
My Warren Buffett fund is actually the worst performing of my four Motif funds, lagging my American Future Fund and its 22% return, but I’m happy with the gains so far. The companies in the Buffett fund are mostly larger and more mature than those in other funds so you’d expect a little slower growth.
Some of the individual companies in my Warren Buffett fund have done better than I dreamed. Shares of International Business Machines (IBM) have struggled for years as the company tries to transition from its sluggish hardware business but have jumped 32% since February. Shares of drywall maker USG have surged 61% on a strong housing market.
Three stocks now account for more than 6% of the portfolio, not including the ETFs in the fund. That’s more than I usually like holding because it means one company can really affect your net wealth if something goes wrong.
Rather than sell the stocks and incur trading fees, I’ll probably just add money to other stocks to rebalance the portfolio.
A few stocks haven’t done as well. The largest residential mortgage lender in the U.S., Wells Fargo, has had a tough time along with other financial companies. It’s tough for a bank to make money when interest rates are so low but Wells Fargo is one of the strongest banks in the world and has a lot of upside ahead.
Deere & Company has also lagged other stocks but I still think the agriculture theme is one of the best investments over the next few decades. Besides a booming global population that will need more food, we could be heading into a strong La Nina weather pattern that could boost crop prices over the next couple of years.
I’ll add money to some of the smaller positions in the fund as well as in Wells Fargo, Deere, US Bancorp and Coca-Cola.
I don’t agree with all of Warren Buffett’s stock picks but the 13 in my Motif fund have done really well so far this year. Buffett’s investing style looks decades ahead so you shouldn’t get too excited about short-term returns but it’s always nice to be in the green.
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The Warren Buffett fund may not be performing as well as my other funds on Motif Investing but the shares could be more stable when the stock market turns lower. The dividend yield is higher than the market and returns should continue to do very well into the future. You may not necessarily want to invest in all the stocks in the fund but they are a good start to a diversified portfolio.