Berkshire Hathaway versus S&P 500
1990-2009
DOI:
https://doi.org/10.61190/fsr.v19i4.4986Keywords:
Active versus passive management, Index managementAbstract
We examine whether Berkshire Hathaway, one of America's premier actively managed portfolios, can outperform the S&P 500. We find that the returns for Berkshire Hathaway appear higher than the S&P 500 from 1990 to 2009. However, when adjusted for risk, we find the return per unit of risk of Berkshire Hathaway is equivalent to the S&P 500. The relatively low correlation between the two portfolios suggests that an investor may benefit from holding both portfolios rather than either portfolio in isolation. Similar results are found when using the Vanguard 500 Index Fund to proxy the S&P 500.
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