Who doesn’t want to invest like Warren Buffett, Bill Ackman, and other billionaire investors?
There’s a reason why these guys are billionaires. They’re smarter than us mere mortals, have access to better information, and can hire the best and brightest to do their research. Investors have coattailed ultra rich folks for years, content to copy instead of doing their own due diligence.
A new ETF has made the process of replicating the portfolios of billionaire investors easier than ever. The Direxion iBillionaire Exchange Traded Fund (NYSE:IBLN) tracks stocks that are popular with billionaire investors.
Top holdings of the fund include Dollar Tree (NASDAQ:DTLR), Freeport McMoRan (NYSE:FCX), and Mylan (NYSE:MYL). Warren Buffett followers won’t notice the first stock held by Berkshire Hathaway (NYSE:BRK.B) until Kraft Heinz (NYSE:HNZ), which is the 7th biggest position. The ETF has 30 total positions with the largest position at less than 4% of total assets.
The ETF tracks the iBillionaire Index, which has returned 6.59% over the last three years and 1.55% year to date. This isn’t such a great return; the S&P 500 is up 7.99% and 3.48% during the same periods.
It also has a high expense ratio. Thanks to an agreement with the fund manager, expenses are capped at 0.65% annually, even though actual expenses exceeded 1% of assets. Even 0.65% is a lot to pay when Vanguard offers ETFs at less than 0.05% annually.
The ETF is an interesting idea, but until management fees come down it’s easy to make the case that investors would be better off with a run of the mill S&P 500 ETF.
