However, some of the most respected fund managers hold the company in their portfolios, including FE Alpha Managers Sebastian Lyon (pictured), Mick Brewis and Alex Grispos. Their funds are among the very best in their respective sectors, raising the question why more managers don’t have exposure to Buffett’s business.
Grispos, manager of the CF Ruffer Equity & General fund, added to his position at the end of last year.
"As long as the US economy keeps improving, Berkshire’s shares are undervalued, even without Buffett’s genius," he said.
North America
Mick Brewis’ £269.5m Baillie Gifford American is the only fund in the IMA North America sector with Berkshire Hathaway in its top-10, with a holding of 3.9 per cent.
Brewis has run the fund since 1997 and in that time has returned 133.09 per cent to investors, according to data from FE Analytics, more than double the average returns of the sector.
He has significantly beaten the S&P 500 benchmark, which has made 92.09 per cent during that time. Given that it is well known that it is difficult to beat the US market with active management, this is an impressive feat.
Performance of fund vs sector and benchmark since Aug 1997
Source: FE Analytics
There is also a single North American investment trust that holds Buffett in its top-10: The JP Morgan American IT.
Run by Garrett Fish and Eytan Shapiro, this fund has beaten the S&P 500 over three-, five- and 10-year periods, and holds 2.4 per cent in Berkshire Hathaway – the trust’s sixth-biggest position.
Ex-US
For investors who are not looking for a US-specific fund, there are more options available.
There are five funds in the IMA Flexible Investment sector that hold Berkshire Hathaway in their top-10, including Lyon’s Trojan fund and the CF Ruffer Equity & General portfolio.
Lyon holds only 1.7 per cent in the company, but Grispos has put 2.9 per cent of the Ruffer fund in Buffett’s business.
Grispos added to his position at the end of last year, saying that he believed the company is still undervalued.
The manager says conservative accounting practices mean that many assets are recorded at below their true business value, while Buffett has already been preparing the business well for the event of his departure.
Lyon’s holding on the five crown-rated Trojan fund is smaller, at 1.7 per cent, but given that the fund holds only 34 per cent in equities, it makes up a significant part of that segment of the portfolio.
Trojan is second only to the Ruffer fund over five years, having returned 45.09 per cent compared with 51.06 per cent; the average retail fund in the IMA Flexible Investment sector has made only 9.62 per cent in this time, according to data from FE Analytics.
The three other funds in the sector hold a higher percentage in the company. Artemis Strategic Assets holds 2.9 per cent, CF Richmond Core 5.1 per cent and SF Metropolis Value 7.55 per cent.
Artemis Strategic Assets is a top-quartile performer over three years, although the Richmond fund is third quartile over that time and fourth over five. The Metropolis fund only has a one-year track record.
In the Mixed Investment 40-85% Shares sector, the tiny MFM Hathaway fund – it is worth just £7.6m – holds 4.52 per cent in Berkshire Hathaway. The portfolio is a top-quartile performer over one, three and five years.
The final retail fund to hold Berkshire Hathaway in its top-10 is the CF Odey UK Absolute Return fund.
This is not run by hedge fund star Crispin Odey, but by James Hanbury and Jamie Grimston. It does, however, include many of Odey’s favourite ideas, including a large position in Sky Deutschland.
Its 5.2 per cent in Berkshire Hathaway makes it one of the retail funds to place the most trust in Buffett.
The portfolio is the outstanding fund in the IMA Absolute Return sector, with the best returns over three years, one year, six months and even one month.
It should be noted that the fund takes the All Share as its benchmark, however, and operates more as a long/short equity fund than the more conservative funds that make up the majority of the sector’s constituents.
Performance of fund vs sector and benchmark over 3yrs
Source: FE Analytics
The fund has made money in each calendar year since launch in 2009, however, and has also beaten the FTSE All Share.
The students
Buffett’s success has encouraged many fund managers to try to emulate his methods. He is famous for his high-conviction buy-and-hold strategy, once saying that if someone has six investments it is better to add to the sixth rather than open a seventh.
One high-profile advocate of this approach is FE Alpha Manager Nick Train. Train’s £258.1m Finsbury Growth & Income Trust is an extremely concentrated portfolio of just 26 stocks with a low turnover. Berkshire Hathaway holds just 34.
The fund has made 330.26 per cent over 10 years, the best results among the 20 funds in the IT Growth & Income sector with a track record that long.
| Name | % in Berkshire Hathaway |
|---|---|
| CF Odey - UK Absolute Return | 5.2 |
| Artemis - Strategic Assets | 2.9 |
| CF - Richmond Core | 5.1 |
| CF Ruffer - Equity & General | 2.9 |
| SF - Metropolis Value | 7.55 |
| Troy - Trojan | 1.7 |
| MFM - Hathaway |
4.52 |
| Baillie Gifford - American | 3.9 |
Source: FE Analytics
Train told FE Trustnet in a recent interview that he believes investing is a simple process that most managers over-complicate.
Thomas See, who heads up the Schroder Income Maximiser portfolio, recently told FE Trustnet that he is a big admirer of Buffett. The manager believes investors should embrace volatility, and used one of Buffett’s famous sayings to illustrate his point: "Investors should be greedy when others are fearful, and fearful when others are greedy."
There is even a fund in the IMA universe that is named after the legendary investor – Premier ConBrio Sanford Deland UK Buffetology.
The £2.9m fund, which sits in the UK All Companies sector, aims to capitalise on the impact of compounding over the long-term – an approach championed by Buffett.