Investing Like Warren Buffett and Other Billionaires Just Became Easier

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People tend to listen when billionaires talk. In regards to volume, nothing speaks louder than actions, especially when those actions involve large sums of money. Retail investors wishing to follow investment decisions of Wall Street’s most elite now have a new way of doing so.
The wealthy must be doing something right. That appears to be the investment strategy behind the new Direxion iBillionaire Index ETF (NYSE:IBLN). The exchange-traded fund seeks to track the iBillionaire Index, which monitors equity portfolios of billionaire investors such as Warren Buffett, David Einhorn, Carl Icahn, Daniel Loeb, George Soros, and several more. Investments made by these billionaires are tracked by using mandatory 13-F filings found at the Securities and Exchange Commission.
The Direxion iBillionaire Index ETF is similar to other funds such as Global X Guru Index ETF (NYSE:GURU) and AlphaClone Alternative Alpha ETF (NYSE:ALFA). However, there are some key differences. The iBillionaire Index ETF has a lower expense ratio of 0.65 percent, and focuses on only thirty stocks. Global X Guru Index ETF has an expense ratio of 0.75 percent and holds fifty-four stocks, while AlphaClone Alternative Alpha ETF has an expense ratio of 0.95 percent and holds eighty-six stocks.
As always, investors need to remember their own risk tolerance levels and financial goals. Tracking 13-F releases is not without its downside. The filings become public within forty-five days of the previous quarter so the information is obviously a bit outdated. Furthermore, the 13-F provides a peek at what billionaires are doing, but doesn’t reveal their hedging and trading strategies. Nonetheless, the iBillionaire Index is more likely to represent long-term positions than quick-money momentum plays.
The index is composed of the top mid- and large-cap equities listed on the S&P 500 in which billionaires have allocated the most funds. Holdings include popular names like Apple (NASDAQ:AAPL), Priceline (NASDAQ:PCLN), Mastercard (NYSE:MA), Google (NASDAQ:GOOGL), and Verizon (NYSE:VZ). Since the iBillionaire Index launched late last year, it has increased 12.6 percent compared to the S&P 500’s rise of 9.2 percent.
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Investing in ETFs like the iBillionaire Index can be especially useful to some market participants. If you find yourself often chasing into stocks simply because news breaks about a billionaire making an investment, an ETF could help keep your emotions under control and your portfolio better diversified. It could also help you avoid a catastrophic loss from investing blindly in any single stock. After all, even billionaires make mistakes.
Follow Eric on Twitter @Mr_Eric_WSCS

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