Warren Buffett Points to One Remarkable ETF History Keeps Proving Right

Warren Buffett wrote in his 2013 letter to Berkshire Hathaway shareholders that
the trustee of his wife’s inheritance should put 90% of the cash into a very
low-cost S&P 500 index fund and 10% into short-term government bonds. The
directive was a formal instruction for the management of his estate.

The Vanguard S&P 500 ETF (NYSEMKT:VOO), which charges just 0.03% in annual fees,
has averaged 14.9% total returns since its September 2010 launch, and Crestmont
Research data shows the S&P 500 delivered positive total returns in all 107
rolling 20-year periods since 1900. Understanding your own financial
fitness may help you decide how much of that historical resilience belongs
in your portfolio.

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Buffett directed 90% of his wife’s inheritance into a low-cost S&P 500 index
fund

The instruction appeared in Buffett’s 2013 annual letter, where he told the
trustee to avoid high-fee managers and complex strategies in favor of a simple
index fund allocation, the Motley Fool detailed. Buffett argued that S&P 500
investing is functionally a bet on the U.S. economy, writing: “For 240 years,
it’s been a terrible mistake to bet against America, and now is no time to
start.”

The advice carried extra weight because it came from someone who made his
fortune picking individual stocks. Buffett has repeated the recommendation
multiple times since 2013, reinforcing that most investors, including
professionals, would produce better results with a passive approach than by
trying to outperform the index.

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The Vanguard S&P 500 ETF charges 0.03% and holds $1.8 trillion in
assets

VOO’s expense ratio of 0.03% means an investor pays just $3 per year for every
$10,000 invested, making it one of the lowest-cost funds available, the Motley
Fool confirmed. The fund holds approximately $1.8 trillion in assets under
management and pays a dividend yield of roughly 1.05%.

The SPDR S&P 500 ETF Trust (NYSEMKT:SPY), the oldest and most widely traded S&P
500 fund, charges 0.09%, which is three times the Vanguard fee, the Motley
Fool’s earlier analysis showed. On a $100,000 investment over 30 years at 10%
annual returns, that gap could amount to thousands of dollars in savings for
your retirement.

VOO has averaged 14.9% annual total returns since its September 2010
launch

VOO delivered an average annual return of 12.8% on price alone and 14.9% when
including reinvested dividends from its inception through September 14, 2026,
the Motley Fool calculated. At that pace, a $10,000 investment at launch would
have grown to roughly $80,000 by early 2026, QuantFlowLab estimated.

The 30-year average for the S&P 500 is closer to 8.5% annually on price and
10.5% including dividends, which the Motley Fool flagged as a more conservative
baseline for planning purposes. VOO’s higher-than-average returns since 2010
benefited from the longest bull market in history and the post-pandemic tech
rally, conditions that may not repeat at the same pace.

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Crestmont Research found positive returns in all 107 rolling 20-year periods
since 1900

Crestmont Research examines the rolling 20-year total returns of the S&P 500
annually, tracking every period from 1900 through the present, the Motley Fool
wrote in September 2026. All 107 periods ending from 1919 through 2025 produced
a positive annualized total return, meaning investors who held for 20 years made
money every single time regardless of when they started.

Roughly 90% of those 20-year windows delivered an annualized total return of at
least 6%, and about half generated returns between 9.3% and 17.1%, the Nasdaq
summary of the data showed. For your retirement planning, the Crestmont data
suggests that time in the market, rather than timing the market, has been the
single most reliable factor in building wealth from U.S. equities.

The S&P 500’s sector mix spreads your money across 11 industries

VOO holds companies from all 11 major sectors of the U.S. economy, though the
weighting has tilted sharply toward technology in recent years, the Motley Fool
broke down. The largest sector allocations as of September 2026 include the
following.

• Information technology at 36.6%, the dominant sector by a wide margin.

• Financials at 12.5%, followed by communication services at 9.9%.

• Consumer discretionary at 9.4% and health care at 9.1%.

• The remaining six sectors, from industrials to materials, collectively make
  up about 22.6%.

The heavy tech weighting means VOO’s short-term performance depends on a handful
of mega-cap names. Retirees who want broader diversification could pair VOO with
a small-cap or international fund, though the sector breadth already exceeds
what most individual stock portfolios achieve.

The 30-year average total return of 10.5% offers a baseline for retirement
math

VOO’s 14.9% average since 2010 outpaced the S&P 500’s 30-year average total
return of 10.5%, the Motley Fool cautioned. Using the longer-term average as a
planning assumption protects against overestimating future returns, particularly
for retirees who may not have a 16-year runway to recover from a deep drawdown.

At 10.5% annual total returns, $10,000 invested in VOO doubles roughly every
seven years. Buffett’s endorsement is not a guarantee, but 107 consecutive
positive 20-year periods offer a historical record no other major asset class
matches.

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Bottom line

Buffett’s 2013 directive to put 90% of his wife’s inheritance into a low-cost
S&P 500 index fund continues to hold up. VOO charges 0.03% in annual fees, has
averaged 14.9% total returns since its 2010 launch, and tracks an index that
Crestmont Research shows has delivered positive total returns across all 107
rolling 20-year periods since 1900.

Before you start
investing additional capital or reallocating from more complex holdings,
weighing VOO’s 30-year average total return of 10.5% against the fees and
performance of whatever else sits in your portfolio could reveal whether simpler
is also stronger. The historical record does not guarantee future results, but
125 years of data and Buffett’s personal endorsement make a compelling case for
keeping this fund at or near the center of your allocation.

This article is for informational purposes only and should not be considered
investment advice.

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