Warren Buffett Index Fund Portfolio
0.54%May 01 | MyPlanIQ portfolio symbol P_76645

  • Portfolio Overview
  • Asset Allocation and ETFs
  • Performance
  • Calculators
  • Rolling Returns
  • Drawdowns

Portfolio Overview


This portfolio is also called Warren Buffett Index Portfolio (90/10), or sometimes Warren Buffett ETF Portfolio (90/10), a strategy inspired by the investment principles outlined by Buffett himself. In his 2013 letter to Berkshire Hathaway shareholders, Buffett revealed instructions he had left for the trustee managing his wife's inheritance. He said 90% of the money should go into a low-cost S&P 500 index fund, and the other 10% into short-term government bonds.

It's meant to be simple. The idea is, you capture the long-term growth of the stock market with the index fund, while the small bond piece adds some cushion. It's passive by design. No stock picking, no timing. Just stay invested.

The 90% in stocks reflects Buffett's conviction that, over time, equities will outperform. But the emphasis was also on using low-fee index funds---because fees matter. That part is often overlooked. A few tenths of a percent in costs, compounded over decades, makes a big difference.

The 10% in short-term government bonds is there for stability. It's not going to earn much, but that's not the point. It's more about having some dry powder and reducing portfolio swings a little.

This kind of portfolio is best suited for someone who doesn't need to touch the money for a very long time. Preferably over 20 years. Otherwise, the volatility from that 90% equity exposure could be tough to live through.

Asset Allocation

The portfolio consists of the following

Stocks VFINX 90%
Bonds VFISX 10%

It's simulated from 10/30/1991

ETF and Other Fund Substitutes

Substitute

VFINX to VOO, SPY, VTI

VFISX to SHY, USFR, TFLO,BSV

Diversification and Risk Level

The portfolio is heavily tilted toward U.S. large-cap stocks, so it ends up being closely tied to the performance of the U.S. economy. And while the S&P 500 is diversified across sectors, it still leaves out quite a bit---it doesn't have any international exposure, no small caps, no real estate, no commodities. Just one slice of the global market.

The 10% bond allocation offers a bit of cushion, but it's pretty modest. So this setup is generally more suitable for someone with a higher risk tolerance, or at least someone who understands and accepts the ups and downs that come with heavy equity exposure.

Pros and Cons

Pros:

  • Simple and easy to manage.
  • Low-cost due to the use of index funds.
  • Historically strong long-term returns from the S&P 500.
  • Minimal maintenance required.

Cons:

  • Limited diversification outside U.S. large-cap stocks.
  • Higher volatility due to the heavy equity allocation.
  • No exposure to international markets or alternative assets.
  • May not be suitable for conservative investors or those nearing retirement.

Application for Retirement Accounts (401(k) and IRA)

This portfolio can be easily implemented in retirement accounts like 401(k)s and IRAs as virtually all 401(k) plans include investment options of U.S. stock funds. Here's how:

  1. Identify Equivalent Funds: In a 401(k) plan, look for an S&P 500 index fund (e.g., VFIAX, FXAIX, or similar) for the 90% allocation. For the 10% bond allocation, seek a short-term bond fund or a stable value fund if available.
  2. No Exact Match? If your 401(k) lacks a specific fund, approximate the allocation:
    • For VOO (S&P 500), use a U.S. large-cap stock fund or a total U.S. stock market fund. Again, look for low expense ratios and diversification.
    • For BSV (short-term bonds), use a general bond fund or a money market fund if no short-term bond option exists.
  3. IRA Flexibility: In an IRA, you can directly purchase VOO and BSV or their mutual fund equivalents (e.g., VFIAX for VOO and VBIRX for BSV).

Rule of Thumb: 

  • For stock funds, prioritize index funds, especially low-cost index funds
  • For bond funds, prioritize core bond funds or high-quality actively managed total return bond funds  (if available).
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Asset Allocation


Symbol Category/Sector Target Weight
VFINX
VANGUARD 500 INDEX FUND INVESTOR SHARES 		US Equity 90%
VFISX
VANGUARD SHORT-TERM TREASURY FUND INVESTOR SHARES 		Fixed Income 10%


Historical Performance


The return data shown below all have the same latest date: 05/01/2025.
AR inception is since 12/16/1994.
Name YTD Return 1Yr AR 3Yr AR 5Yr AR 10Yr AR 15Yr AR 20Yr AR Inception
Warren Buffett Index Fund Portfolio -3.82% 12.10% 11.29% 14.88% 11.15% 11.70% 9.52% 10.08%
VFINX (VANGUARD 500 INDEX FUND INVESTOR SHARES) -4.37% 13.03% 12.04% 16.35% 12.16% 12.80% 10.20% 10.66%
VSMGX (VANGUARD LIFESTRATEGY MODERATE GROWTH FUND INVESTOR SHARES) 1.21% 10.24% 6.96% 8.03% 5.81% 6.59% 6.00% 7.47%

Warren Buffett Index Fund Portfolio Return Calculator

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Calculators


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Rolling Returns


From 10/30/1991 to 05/01/2025, the worst annualized return of 3-year rolling returns for Warren Buffett Index Fund Portfolio is -13.73%.

From 10/30/1991 to 05/01/2025, the worst annualized return of 5-year rolling returns for Warren Buffett Index Fund Portfolio is -5.36%.

From 10/30/1991 to 05/01/2025, the worst annualized return of 10-year rolling returns for Warren Buffett Index Fund Portfolio is -2.4%.


Maximum Drawdown

Warren Buffett Index Fund Portfolio Maximum Drawdown