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Buffett’s Favorite ETF Backed by a Decade of Gains but Faces Concentration Risk

VOO’s strong 10-year performance and rock‑bottom fee make it a sensible long‑term core for many investors.

Warren Buffett says most investors should choose a low-cost S&P 500 ETF. (AP Photo/Nati Harnik, File)
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SPIVA’s latest scorecard shows most active fund managers consistently lag benchmarks, reinforcing Warren Buffett’s long-standing case for index investing.

Overview

  • Warren Buffett has long urged most individual investors to hold a low‑cost S&P 500 index fund, advice that recent coverage revisits in light of VOO’s performance.
  • The Vanguard S&P 500 ETF (VOO) returned roughly 303% over the past ten years and charges a 0.03% annual expense ratio, meaning about $3 per $10,000 invested.
  • VOO has grown to be one of the largest funds tracking the S&P 500, with the ETF passing the $1 trillion mark and the broader Vanguard 500 Index Fund family holding roughly $1.6–1.7 trillion in assets.
  • Data show most active large‑cap managers lag the benchmark—about 79% trailed the S&P 500 in 2025—yet the index’s top 10 stocks accounted for roughly 40.7% of its weight at year‑end 2025, which raises near‑term volatility risk if a few mega‑caps fall.
  • Advisers say the fund still serves well as a long‑term core, but investors should match it to their time horizon and risk tolerance and consider tilt options such as equal‑weight, minimum‑volatility, international exposure, or a core‑and‑satellite approach to reduce concentration risk.