Warren Buffett Owns 1 Vanguard ETF That Could Rise 163%, According to a Top Wall Street Analyst

Warren Buffett, CEO of Berkshire Hathawaymanages a portfolio of 45 publicly traded stocks and securities worth $315 billion, in addition to $277 billion in cash reserves and numerous private, wholly owned companies.

Buffett has a remarkable track record. His investment choices have driven Berkshire stock to a compound annual return of 19.8% since he took over in 1965, beating the 10.2% average annual return in the S&P 500 (SNP INDEX: ^GSPC) index over the same period.

Buffett knows that average investors would have a hard time matching his returns by picking individual stocks, so he often recommends that they buy exchange-traded funds (ETFs) instead. And Berkshire has two in its portfolio: the Vanguard S&P 500 ETF (NYSEMKT: VOO)and the SPDR S&P 500 ETF Confidence.

Both are designed to track the performance of the S&P by holding the same stocks and maintaining similar weightings. However, the Vanguard ETF is cheaper to own (I’ll get into that in a moment), so let’s focus on that.

If one particular Wall Street analyst is correct, the stock could see a 163% increase by 2030!

Why the Vanguard S&P 500 ETF is a Great Choice for Investors

The S&P 500 has strict eligibility criteria. Companies must have a market capitalization of at least $18 billion and be profitable. Even then, eligibility is at the discretion of a committee that rebalances the index quarterly.

As a result, investors can be sure they’re buying exposure to the highest-quality companies when they put money into the Vanguard S&P 500 ETF. And it has a 0.03% expense ratio (the portion of the fund that’s taken out each year to cover expenses), making it much cheaper to own than the SPDR ETF, which has a 0.09% expense ratio.

The ETF consists of 11 different sectors. Technology is the largest with a weighting of 31.1%, followed by financials at 13.2% and healthcare at 12.2%. The tech sector is likely to drive the S&P higher for years to come, as it is home to the world’s most valuable companies and the index is weighted by market capitalization.

The five largest holdings in the Vanguard S&P 500 ETF have a combined market cap of $12.9 trillion, accounting for just over 25% of the total value of the entire 500-company portfolio:

Data source: Vanguard. Portfolio weightings are accurate as of August 31 and are subject to change.

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The Vanguard ETF Could Rise 163% by 2030

Wall Street analysts don’t always get it right, but Tom Lee, managing partner at Fundstrat Global Advisors, has made some very accurate predictions about the S&P 500 in recent years:

• He said the S&P would hit 4,750 in 2023 and closed the year at 4,769.

• He started 2024 with a goal of 5,200, which he surpassed within the first three months.

• He then said the index would reach 5,500 in June, and it did.

Lee’s most recent year-end forecast is 5,700 on the S&P. Considering it closed at 5,702 on September 20, it looks like he’ll add that to his list of successful calls.

Earlier this year, he also issued a long-term forecast suggesting the index could top 15,000 by 2030. That implies a 163% upside from here, which is the return investors can expect from the Vanguard S&P 500 ETF if he’s right.

Lee says AI will be a key driver of the move. He estimates that the global workforce will be short by 80 million workers by the end of this decade, which will lead to increased investment in AI technologies to automate more jobs.

He also says there’s a huge demographic tailwind coming, with millennials and Gen Zers entering the prime time of their lives (between 30 and 50 years old). That’s when people make the most money and when they make big life decisions, like investing.

Of course, there are risks. A global recession could add years to Lee’s 15,000 target, and if AI doesn’t live up to expectations, some of the world’s largest stocks I’ve mentioned before could face a prolonged period of underperformance.

That said, even if the S&P 500 doesn’t hit 15,000 by 2030, history shows that it will eventually. So investors should definitely consider following Buffett’s advice and buying the Vanguard S&P 500 ETF.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former chief market development officer and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, Oracle, Tesla and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Warren Buffett Owns 1 Vanguard ETF That Could Rise 163%, According to Top Wall Street Analyst was originally published by The Motley Fool