VOO - Buffett's Risky winning ETF bet ? Buy ?
Warren Buffett has spent decades building one of the most complex investment portfolios in the world.
$Berkshire Hathaway(BRK.B)$ owns railroads, insurance companies, fast-food chains and consumer brands. Its operating earnings topped $44.5 billion in fiscal year 2025.
His advice to ordinary investors looks nothing like that portfolio.
Buffett has repeated the same recommendation for years, and it does not involve picking stocks, timing markets or hiring expensive money managers.
In his 2013 letter to Berkshire shareholders, Buffett wrote that his estate’s trustee should put 90% of cash in a very low-cost S&P 500index fund, naming Vanguard specifically.
The fund in this instruction is the $Vanguard S&P 500 ETF(VOO)$.
Why Mr B. says skip stock picking ?
Buffett is not saying cannot pick stocks. His track record at Berkshire proves otherwise. What he is saying is that most investors do not have the tools Berkshire has.
Berkshire owns operating businesses that throw off billions in cash each year. That cash gives Buffett the ability to hold stocks through long downturns without ever being forced to sell.
Most individual investors do not have that cushion.
Active fund managers charge fees that eat into returns year after year. Buffett has argued that those fees, compounded over decades, leave most investors worse off than simply owning the index at a fraction of the cost.
His endorsement of index funds is also practical. You do not need to analyze earnings reports, track management changes or assess competitive threats.
You buy the fund and hold it.
What VOO gives long-term investors
VOO tracks the $S&P 500(.SPX)$ index.
It holds shares in roughly 500 of the largest US companies across technology, healthcare, financials, consumer goods and energy. No single company failure can bring down the fund.
The expense ratio is 0.03% per year. On a $10,000 balance, that is $3 annually.
Over 30 years, the difference between paying that and paying a 1% management fee adds up to tens of thousands of dollars in your account rather than your manager’s.
The index rebalances itself.
Companies that grow increase their weighting. Companies that shrink or collapse get replaced. You do not have to make any of those decisions.
VOO also pays quarterly dividends from the underlying holdings. Reinvesting those dividends automatically increases your share count over time without any additional contribution from you.
Young investors’ edge with VOO
A 25-year-old investing in VOO has roughly 40 years before traditional retirement age. That time horizon changes how one should think about short-term losses.
A -20% market decline is painful if investors need the money in 3 years. Over 40 years, it is a footnote.
Markets have recovered from every major drawdown in US history, and young investors have the time to wait out the ones that come next.
Contributing a fixed amount every month regardless of market conditions means an investor buy more shares when prices are down. That lowers the average cost per share over time without requiring any judgment calls on your part.
Tax-advantaged accounts make the math even better for US investors. Contributions to a Roth IRA grow tax-free, and qualified withdrawals in retirement are tax-free.
VOO held inside a Roth for 40 years compounds without the drag of annual tax bills on dividends or gains.
What VOO won’t protect investor from ?
VOO is a US large-cap fund. It has a heavy weighting toward technology companies. When that sector sells off sharply, VOO goes with it.
The 90% stock and 10% bond split Buffett described was for his estate, not a universal prescription.
An investor’s “right” allocation depends on his/her income, expenses, other assets and how much volatility he/she can tolerate without selling.
Do not invest in VOO before you have an emergency fund.
3 to 6 months of expenses in cash means a market drop does not force an investor to liquidate shares at a loss to cover a car repair or a medical bill.
International stocks are also worth considering alongside VOO as it holds no foreign companies.
A separate international index fund adds exposure to economies and industries outside the US.
VOO - How to start ?
For a US investor.
Capture your employer’s 401(k) match first. If your employer matches 50% or 100% of contributions up to a certain percentage of your salary, that match is an immediate return no market can offer. Contribute at least enough to get it all.
Open a Roth IRA if your income qualifies. The 2026 contribution limit is $7,500. VOO is available on most major brokerage platforms with no transaction fee.
Set up automatic contributions on a fixed schedule. Weekly, biweekly or monthly all work. The point is to remove the decision from the process so market headlines do not interrupt your contributions.
Buffett’s instruction was not complicated: buy a low-cost S&P 500 index fund and hold it. VOO is what that looks like in practice for investors who are just getting started.
About VOO - Facts & Pertinent info.
Below is some important facts about VOO - a large-cap US equity ETF that seeks to track the S&P 500 Index using a passively managed, full-replication strategy.
It is listed on NYSE Arca and distributes income quarterly.
As of 30 Sep 2026, VOO:
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Held 505 securities.
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Had a median market capitalization of $462.2 billion.
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Price/earnings (P/E) ratio of 24.7x.
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Price/book of 5.3x.
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Return on equity (ROE) of 29.0%.
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Earnings growth rate of 24.5%.
VOO’s Holdings.
The portfolio is market-cap weighted.
Meaning, its exposure is concentrated in the largest US companies, with the 10 largest holdings represented about 37.65% of assets in an October 2026 holdings snapshot. (see below)
VOO’s Top 10 Holdings.
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6 of 7 Magnificent 7 stocks are found here except for $Tesla Motors(TSLA)$. That says a lot.
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Including the biggest US bank - $JPMorgan Chase(JPM)$ and public conglomerate $Berkshire Hathaway(BRK.B)$
VOO performance - As of 16 Oct 2026
VOO’s Performance.
VOO’s annualized NAV total returns through 30 Jun 2026 were :
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+22.28% over 1 year.
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+20.58% over 3 years.
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+13.36% over 5 years.
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+15.47% over 10 years.
Based on above performance chart, VOO’s negative performance, was only in the past week when investors took profilt and bailed on A( & AI-related stocks due to fears stoked by $CoreWeave, Inc.(CRWV)$ (click here ! for my post on CRWV in details)
Investment Considerations - my viewpoints (mine only).
Overall, VOO is a low-cost core equity holding (expense ratio of 0.03% only) that is substantially below the 0.41% average for S&P 500 index funds cited by Vanguard.
Its low fee, broad benchmark exposure, and passive structure make it suitable for long-term investors seeking US large-cap equity returns without active management.
Although it holds more than 500 companies, its market-capitalization-weighted design creates meaningful concentration in a small number of mega-cap names.
The 10 largest holdings account for about 37.65% of assets, led by NVDA, AAPL, MSFT, and GOOG, resulting in VOO’s performance being heavily influenced by a limited group of companies.
Overall portfolio is also technology-heavy :
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Information technology making up 39.7% of assets.
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Followed by financials at 11.4%.
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Communication services at 9.9%.
As a result, VOO becomes particularly sensitive to (a) earnings, (b) valuations, and (c) sentiment surrounding large technology companies.
Still, VOO delivers returns closely aligned with the S&P 500 Index.
Over the 10 years through 30 Sep 2026, VOO returned 15.29% annualized on a NAV basis, compared with 15.33% for the index, reflecting effective tracking with only modest performance differences.
As an equity ETF, VOO carries principal risk where its value can decline and it is neither guaranteed nor FDIC-insured.
Investors should therefore treat it as a long-term growth allocation rather than a capital-preservation vehicle.
FSMOne's VOO factsheet extract
Is that the reason why FSMOne has rated VOO as a “high” risk ETF ? (see above) What do you think ?
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Do you think VOO’s “broad diversification” is partly an illusion when 6 of Magnificent Seven dominate its top holdings and information technology (IT) alone represents 39.7% of assets ?
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Do you think VOO’s 100% US focus exposes investors to systemic risks, eg. fiscal deficits or de-dollarization, that could cap future domestic growth compared to international equities? ?
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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
With that, VOO is also coming in higher than its pre-market indicative rise of +0.28%. At of this update, VOO is higher than Tuesday at +0.62% (see attached).
Has traders forgotten and forgiven the AI-scarce that has plagued market for the past few days ?
Is it time to jump into VOO now, when simmering tension in the Middle East seemed to be stirring again. What do you think ?
S&P 500 is the smallest riser of the 3; potentially opening higher by +0.30%. This should be the accompanying effect for VOO as well.
Since VOO is a mirror of the S&P 500, it rose too by +031% (even higher than the index).
Hurray ?
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