Berkshire Hathaway's track record and why people compare to it

Berkshire Hathaway (BRKB) is Warren Buffett's holding company, and it trades as a stock rather than an ETF. Over decades it has beaten the S&P 500 average, which is why investors often use it as a benchmark. But "better performance" depends on what you measure and over what time period — a fund that outperforms Berkshire in one year may lag it in the next.

The comparison itself is tricky because Berkshire is a single stock, not a diversified fund. An ETF spreads money across dozens or hundreds of holdings, so it moves differently. Some ETFs beat Berkshire in certain years; others consistently lag. The question is really: what kind of performance matters to you, and over how long?

Key Takeaways

  • No ETF consistently beats Berkshire Hathaway across all time periods — performance varies by year and by market conditions.
  • Value-focused ETFs like VTV and SCHV sometimes outperform Berkshire in years when value stocks rise, but underperform in growth-heavy years.
  • Total market ETFs like VTI track the entire U.S. stock market and have beaten Berkshire over some periods but trailed it over others.
  • Berkshire itself is a concentrated bet on one company's management; most ETFs offer broader diversification at lower cost.
  • Comparing annual returns is misleading — looking at 5-year, 10-year, or 20-year returns gives a clearer picture of actual performance.

Value ETFs that sometimes outperform Berkshire

VTV (Vanguard Value ETF) and SCHV (Schwab U.S. Value ETF) hold stocks that trade below their book value — the same strategy Berkshire uses. In years when value stocks outperform growth stocks, these ETFs often beat Berkshire's returns. In 2022, for example, value-heavy portfolios rose while Berkshire fell, partly because Berkshire holds significant cash and some growth-oriented positions.

The catch is that these ETFs hold many smaller value stocks, not just the large-cap names Berkshire favors. They are more volatile and can lag badly when growth stocks dominate, as they did from 2015 to 2020. Over a full market cycle, VTV and SCHV have not consistently beaten Berkshire — they have simply moved differently depending on which type of stock is in favor.

Total market ETFs and their long-term performance

VTI (Vanguard Total Stock Market ETF) and SWTSX (Schwab U.S. Total Stock Market Index) hold every publicly traded U.S. company in proportion to its market size. They are the broadest possible U.S. stock bet. Over the past 10 years, VTI has returned roughly 12% annually on average, while Berkshire has returned roughly 10% — a meaningful gap, but not a huge one.

The reason total market ETFs sometimes edge out Berkshire is simple: they own the entire market, including the many small and mid-cap companies that have grown faster than Berkshire's portfolio. Berkshire is a single large company making concentrated bets; VTI owns Berkshire plus thousands of other stocks. When smaller companies surge, VTI benefits more. When the market crashes, Berkshire's cash reserves sometimes cushion it better than VTI's full exposure.

Over 20-year periods, the gap narrows. Berkshire's long-term returns have been competitive with total market returns, though not dramatically higher in recent decades.

Why comparing a stock to an ETF is misleading

Berkshire Hathaway is a single company run by one person's investment decisions. An ETF is a basket of hundreds of stocks following a rule-based strategy. Comparing them as if they are the same thing obscures what you are actually choosing between.

If you own Berkshire, you are betting that Buffett's stock picks and capital allocation will beat the market. If you own VTI, you are betting that the market as a whole will deliver reasonable returns without requiring you to pick winners. One is active management; the other is passive. They have different costs, different tax consequences, and different risks.

Berkshire charges no management fee (you pay a stock commission), but you bear the risk that Buffett's decisions underperform. VTI charges 0.03% annually and guarantees you will match the market return, minus that tiny fee. Neither approach is objectively "better" — they suit different investors.

Dividend-focused ETFs versus Berkshire's approach

VYM (Vanguard High Dividend Yield ETF) and SCHD (Schwab U.S. Dividend Equity ETF) hold stocks that pay high dividends. Berkshire rarely pays dividends — it reinvests profits into new acquisitions and stock buybacks. In years when dividend stocks outperform, these ETFs beat Berkshire's total return. In years when growth stocks dominate, they lag.

The real difference is philosophy. Berkshire believes reinvesting profits creates more value than paying them out. Dividend ETFs bet that high-paying stocks offer better value. Over the past decade, Berkshire's approach has generally worked better, but that can reverse. Dividend ETFs offer more current income if you need cash flow; Berkshire offers more potential for long-term capital growth.

Small-cap and mid-cap ETFs that have beaten Berkshire

VB (Vanguard Small-Cap ETF) and VO (Vanguard Mid-Cap ETF) hold smaller companies that Berkshire rarely buys. In growth-heavy years, small and mid-cap stocks often surge while Berkshire's large-cap holdings lag. From 2003 to 2006, small-cap ETFs dramatically outperformed Berkshire. From 2017 to 2021, they lagged.

Smaller companies are riskier and more volatile than Berkshire's stable of large, established businesses. They can deliver spectacular returns in bull markets and painful losses in downturns. Berkshire's size and diversification make it more stable, even if less exciting. Comparing a small-cap ETF's best year to Berkshire's average year is not a fair test.

How to think about performance comparisons

The honest answer is that no single ETF consistently beats Berkshire across all time periods. Different ETFs win in different years depending on which stocks are in favor. A value ETF beats Berkshire when value stocks surge. A small-cap ETF beats it when small companies outperform. A total market ETF beats it when the market as a whole rises faster than Berkshire's concentrated bets.

If you are looking for an ETF that will reliably outperform Berkshire, you will not find one. What you can find are ETFs that offer lower costs, broader diversification, or different risk profiles. VTI costs 0.03% annually and owns the entire market. VTV costs 0.04% and focuses on value stocks. SCHD costs 0.06% and emphasizes dividends. None of these will beat Berkshire every year, but they offer clarity about what you own and why.

The most useful comparison is not "which beats Berkshire this year" but "which matches my investment goals and risk tolerance." If you want broad market exposure at minimal cost, VTI is the answer. If you want value stocks, VTV works. If you want dividends, SCHD does. Berkshire is a bet on Buffett's judgment; the ETFs are bets on market segments or the market as a whole.

Frequently Asked Questions

Did any ETF beat Berkshire over the past 10 years?

VTI and some other total market ETFs have returned roughly 12% annually over the past decade, while Berkshire returned roughly 10%. However, this gap is not may provide to continue, and Berkshire outperformed the market for most of the 20 years before that. Past performance does not predict future results.

Why does Berkshire underperform in some years?

Berkshire holds large cash reserves and makes concentrated bets on specific stocks and industries. When the market favors smaller companies, growth stocks, or dividend payers, Berkshire's portfolio lags. When the market crashes, its cash and defensive positioning sometimes cushion losses better than diversified ETFs.

Is it better to own Berkshire or an ETF?

That depends on your goals. Berkshire is a single stock with concentrated risk but potentially higher returns if Buffett's decisions outperform. ETFs offer diversification, lower costs, and predictable market returns. Neither is objectively better — they suit different investors and strategies.

Can I own both Berkshire and an ETF?

Yes. Many investors own both a total market ETF for broad exposure and individual stocks like Berkshire for specific bets. This approach gives you a diversified base plus exposure to a company you believe in.

What does "outperform" actually mean?

It means delivering higher returns over a specific time period. A 1-year comparison is unreliable; a 5-year or 10-year comparison is more meaningful. Even then, past performance does not may provide future results, and different time periods will show different winners.