Warren Buffett is not fully out of the picture and has an indirect stake in a secret portfolio that gives him exposure to the iShares Core MSCI EAFE ETF (BATS:IEFA), Vanguard High Dividend Yield ETF (NYSEARCA:VYM), and iShares Core MSCI International Developed Markets ETF (NYSEARCA:IDEV).
Buffett may no longer be Berkshire Hathaway’s (NYSE:BRK-B) CEO, but he is still the Chairman and retains significant shares, especially A-class shares with voting power. And Berkshire itself owns a little-known company with a portfolio of its own, called New England Asset Management (NEAM). Berkshire is known for investing in stocks and having businesses of its own, like BNSF Railway and multiple insurance brands. However, NEAM’s portfolio is more ETF-oriented.
Thus, Buffett actually has exposure to several dividend ETFs, three of which have good yields and good performance. Let’s take a look.
iShares Core MSCI EAFE ETF (IEFA)
IEFA tracks the MSCI EAFE IMI Index, thus giving you exposure to a broad basket of developed-market stocks outside the U.S. and Canada. It includes “first world” European countries, Japan, Australia, and Hong Kong, among others. Stocks in these countries have underperformed their U.S. counterparts earlier this decade as the USD gained significant value and even surpassed the Euro momentarily.
However, the USD fell sharply last year and has been trading sideways. This has allowed stocks in other countries to play catch-up, especially with most countries loosening their monetary policies.
IEFA has thus gained 25.6% over just the past year and is continuing to gain. It comes with a 3.48% dividend yield that is distributed twice a year. The expense ratio is just 0.07%, or $7 per $10,000.
NEAM’s third-largest holding is IEFA, at 6.37% of its portfolio. Holdings have been boosted by 35.2%.
Vanguard High Dividend Yield ETF (VYM)
The Vanguard High Dividend Yield ETF passively tracks higher-dividend-yielding companies that match the FTSE High Dividend Yield index. The index includes REITs, and while it is meant to track companies that have high dividend yields, there are some names that are more growth-oriented.
The biggest holding of VYM is Broadcom (NASDAQ:AVGO) at an 8.69% weight. The rest of its top holdings are a mix of financials and regular Dividend Aristocrats with low to moderate dividend yields.
In total, you get exposure to 571 stocks, and they collectively yield 2.39%, so it’s a great way to diversify. The expense ratio is ultra-low at just 0.06%, or $6 per $10,000.
VYM is the fourth-largest holding and constitutes 4.62% of NEAM’s portfolio. It has also been bumped slightly by 1.77% in the past quarter.
iShares Core MSCI International Developed Markets ETF (IDEV)
IDEV is similar to IEFA, as it mostly targets international stocks in developed markets. However, the difference is that it includes Canada. It tracks the MSCI World ex USA Investable Market Index (IMI). Canadian stocks can make quite a difference due to the country having big financial and mining companies.
It does not try to beat or take temporary defensive positions in down markets but uses representative sampling to resemble the index’s overall characteristics.
Like IEFA, it is likely to keep performing well as the USD depreciates and international stocks do well. It is up 26.5% in the past year and yields 3.33%. It also distributes its dividends twice a year, but the capital gains and the dividend yield you get from it make the lost compounding a rounding error in comparison.
The expense ratio is also the lowest among the three at just 0.04%, or $4 per $10,000. Another great thing is that you get exposure to nearly 2,300 individual stocks. The largest holding is the Dutch ASML Holding (NASDAQ:ASML) company, whose products are indispensable for chipmakers. The top 10 holdings collectively constitute 9.99% of all holdings.
IDEV is the fifth-largest holding and is 4.41% of NEAM’s portfolio. NEAM has increased its holdings here by 30.1%.
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