Since taking control of Berkshire Hathaway in the 1960s, Warren Buffett has steered the investment company to ever greater returns. The market value of the listed investment firm was up by almost 1.6 million per cent between 1965 and the end of 2015.
In comparison, the investment firm’s S&P 500 benchmark had returned ‘just’ 11,355 per cent over the same period.
Buffett has become one of the best known fund managers in the world for his value approach to investing.
In recent years, however, the so-called ‘Sage of Omaha’ has faced increasingly challenging markets and some of the investor’s big bets have not paid off as well as hoped.
Berkshire Hathaway did have a strong 2016, however. The firm saw its share price rise by 21.37 per cent after a tough start to the year. It outperformed the S&P 500 index which rose by just 8.67 per cent last year, in dollar terms.
Performance of Berkshire Hathaway vs S&P 500
Source: Google Finance
The veteran investor famously bet Protégé Partners $1m that an S&P 500 index fund would outperform a bespoke portfolio of fund of hedge funds selected by the hedge fund firm.
However, which US-focused retail funds would investors have been better off backing against Buffett?
Over the past year, one fund has stuck out: the VT De Lisle America fund.
The £29.9m fund was the only fund in the Investment Association universe to outperform Berkshire Hathaway over 12 months.
During 2016, the fund rose by 32.06 per cent (rebased into US dollars) compared with a 11.23 per cent gain for the average IA North America sector fund.
Performance of VT De Lisle America vs S&P 500 over 1yr
Source: FE Analytics
Indeed, the fund was one of the stand-out performers from the broad Investment Association universe for 2016 without a specialist focus.
As well as a strong 2016 showing, the fund holds a better performance against Berkshire Hathaway over five years also.
Over the past five years, the VT De Lisle America fund has generated a 136.82 per cent return compared with a 113.21 per cent gain for Berkshire Hathaway and a 91.91 per cent rise in the index.
But the strongest performing fund for this five-year period was the Legg Mason Opportunity fund, which returned 137.66 per cent, far outstripping the average sector fund performance of 76.5 per cent over five years.
The fund has been managed by Samantha McLemore since inception in 2009. Although the fund has the ability to invest globally, it is made up predominantly of US exposure. Manager McLemore works closely with veteran investor Bill Miller.
(The top performing IA North America fund over five years was the $188.5m JB Multistock Health Innovation fund, which returned 148.04 per cent. However, for comparison purposes, we have used generalist US equities funds.)
Top three US funds’ performance over 5yrs
Source: FE Analytics
As well as the De Lisle and Legg Mason funds, the Fidelity American Special Situations, Old Mutual North American Equity and Dodge & Cox US Stock funds all beat Buffett’s Berkshire Hathaway, returning more than the firm’s 113.21 per cent gain.
The Fidelity American Special Situations fund was up by 118.9 per cent, Old Mutual North American Equity grew by 116.11 per cent and the Dodge & Cox US Stock fund has returned 115.97 per cent.
Over 10 years Buffett has fewer competitors. Berkshire Hathaway’s return over the past decade stands a 123.4 per cent and has been beaten by just two IA North America funds.
Best North America funds over 10yrs
Source: FE Analytics
The T. Rowe Price US Large Cap Growth Equity fund, overseen by Rob Sharps, has a strong track record having returned 169.32 per cent over the past 10 years.
Meanwhile, the Schroder US Mid Cap fund managed by the firm’s head of US small and Smid-cap equity team Jenny Jones has returned 130.57 per cent over the same period. Both funds have easily outperformed the average sector fund performance of 64.87 per cent.