S&P 500 ETF Beats Berkshire as Stock Picking Wanes: Survey
October 26th 2012 at 8:53am by John Spence
The $108 billion SPDR S&P 500 ETF (NYSEArca: SPY) rose to the second most-popular stock pick among high net worth investors after Apple (NasdaqGS: AAPL) as the exchange traded fund scored higher than Warren Buffett’s Berkshire Hathaway (NYSE: BRK-B), according to an annual survey.
“Individual stock-picking is shrinking a little bit,” Michael Sonnenfeldt, founder and chairman of New York-based Tiger 21, told Bloomberg News. “If you want public-equity exposure it’s dramatically cheaper and generally more effective to do it through ETFs.” [Wider ETF Usage Fueling Fee War]
Tiger 21 is peer-to-peer learning network for affluent investors.
Its annual survey revealed U.S. millionaires would rather track the market with SPY rather than try to beat it with high-fee hedge funds, Bloomberg reports. ETFs are baskets of securities that trade like individual stocks.
Index funds and ETFs were rated higher than hedge funds and mutual funds, while 23% of Tiger 21 members said ETFs are their preferred method for stock investing, up from 19% last year. Hedge funds fell to 21% from 27%, according to the article.
The move to ETFs and index funds shows that members see the market stabilizing and acting more normal, Sonnenfeldt told Bloomberg.
Full disclosure: Tom Lydon’s clients own SPY.
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.