Title: ETF Portfolio Update: An S&P 500 Alternative From Omaha Show: Compounding Quality (Substack, paid post — compoundingquality.net) Guest: Pieter Slegers / Team Compounding Quality (author; byline "Compounding Quality") Date: 2026-05-10 URL: https://www.compoundingquality.net/p/etf-portfolio-update-an-s-and-p-500 Length: written post — no timestamps Note: Paid-subscriber post captured via Stephen's logged-in session. Body text verbatim; UI chrome removed. Chart panels (JP Morgan, Visual Capitalist, Goldman Sachs, Vanguard, Multipl, Osborne Partners, Fiscal.ai) noted inline as [Image — ...]. The ETF portfolio weight pies and the per-transaction return tables are published as images and are transcribed below as [Table image — ...] blocks. The on-page section heading reads "ETF Portfolio Update: April 2026" although the post was published on 10 May 2026. Written after the Berkshire AGM weekend in Omaha.
Do you own an S&P 500 ETF?
You must realize that you are way less diversified than you might think.
Let's talk about an interesting S&P 500 alternative I heard about at Warren Buffett's AGM.
The S&P 500
The S&P 500 is the most popular index in the world.
It's also incredibly popular with passive investors.
The three largest ETFs in the world all track the S&P 500:
[Image — the three largest S&P 500 ETFs]
Together, they have more than $2 Trillion (!) in assets.
But when I was in Omaha last weekend, some concerns kept coming up again and again.
The S&P 500 Is Expensive
The price you pay matters.
"The price you pay for an investment determines its risk. The lower the price, the lower the risk and the higher the potential return." - Seth Klarman, Margin of Safety
The S&P 500 index looks expensive today.
The Shiller P/E Ratio, also called the CAPE Ratio, compares a stock's current price to its average inflation-adjusted earnings over the past 10 years.
Using 10 years of earnings helps smooth out short-term market ups and downs that can distort regular one-year P/E ratios.
Right now, it's over 40.
It approaches the valuation we saw before the 2000s dot com crash.
[Image — Shiller CAPE ratio, long history. Source: Multipl]
The S&P 500 doesn't look like much of a bargain on a Forward P/E basis either.
[Image — S&P 500 forward P/E vs history. Source: JP Morgan]
The S&P 500 Is Concentrated
Another concern that came up over and over is the concentration in the S&P 500 index.
Because it is weighted by market cap, the top 10 companies make up nearly 40% of the index.
[Image — S&P 500 top-10 weight. Source: JP Morgan]
Over the past 140 years, the average concentration for the top 10 stocks was 24%.
[Image — 140-year history of top-10 concentration. Source: Visual Capitalist]
The index concentration has (almost) never been higher:
[Image — index concentration. Source: Goldman Sachs]
But in Omaha, Christopher Bloomstran pointed out something interesting.
In the past, even when the index was concentrated, the companies were usually not all tied to the same trend or idea.
For example, the "Nifty Fifty" stocks of the 1960s made the index more concentrated, but the companies operated in different industries.
They included names like IBM, Coca-Cola, Xerox, and Polaroid.
Even in 2000, not all the companies were internet companies:
[Image — the 2000 top-10 by industry. Source: Osborne Partners]
Companies like Walmart, Exxon Mobil, and Citigroup had nothing to do with the internet boom.
Today's top 10 stocks are much more connected to the same trend.
[Image — today's top 10 and their AI linkage. Source: Vanguard]
8 of the 10 are now related to Artificial Intelligence.
The math behind AI spending is not very encouraging.
The hyperscalers are expected to spend $700 billion on AI infrastructure in 2026 alone.
To earn a 10% return, they would need to generate $70 billion in profit from that investment.
AI revenue is growing quickly, but it still is very early in the journey.
[Image — AI revenue estimates. Source: Visual Capitalist]
All AI-related revenue was estimated at only about $40 billion in 2025.
If AI businesses earn a 10% profit margin, they would need $700 billion in revenue to generate a 10% return on that spending.
This raises an interesting question...
Why Do Investors Buy The Index?
The S&P 500 does have some really attractive features that make it such a popular investment.
Diversification: you get a piece of 500 of the best companies in the world
Low costs: most index funds cost less than 0.5% to own
It lets winners run, and losers drop out: Peter Lynch's idea of watering the flowers and cutting the weeds happens automatically
It's performed well over the long-term
These are great reasons to invest in the S&P 500, but as you have just seen, the index isn't as diversified as it once was.
And as every disclaimer says, past performance is not a guarantee of future results.
Based on valuation alone, the future returns of the S&P 500 look much lower than they have been in recent years.
[Image — starting valuation vs subsequent 10-year returns. Source: JP Morgan]
When you combine high valuations with the difficult math behind earning strong returns on AI spending, future returns start to look even less attractive.
It would be ideal to get the benefits of the S&P 500 at a lower price and with less concentration in AI-related companies.
Interestingly, several investors in Omaha presented ideas for exactly that kind of investment.
The S&P 500 Alternative
Investing in Berkshire Hathaway could be a very interesting alternative to the S&P 500.
Here are a few reasons why:
Diversification
Low cost
Let your winners run
Amazing returns
Diversification
Berkshire Hathaway gives you ownership in 26 public companies through its stock portfolio.
It also includes more than 60 private companies that are fully owned by Berkshire.
Those include names like:
BNSF Railroad
Dairy Queen
Clayton Homes
GEICO
NetJets
Duracell
Fruit of the Loom
...
On top of that, they also have the massive insurance operation as well as Berkshire Hathaway Energy.
I would say that Berkshire Hathaway is very well diversified.
Low Cost
This one is easy ...
While the fees to own an S&P 500 ETF are very low, there are no management fees to own Berkshire Hathaway stock.
Let Your Winners Run
Warren Buffett has said many times that his favorite holding period is forever.
When Berkshire Hathaway buys something it does so with the intent of holding on for the long term.
Warren Buffett started buying Coca-Cola in 1988.
See's Candies was bought in 1972.
Both companies have performed exceptionally well for Berkshire Hathaway.
Past Performance
Another easy one.
Over the long-term, Berkshire Hathaway has performed significantly better than the S&P 500.
[Image — Berkshire Hathaway vs S&P 500, long run. Source: Fiscal.ai]
When you buy Berkshire Hathaway, you get a diversified bet on the American economy.
They have performed really well and have a lot of cash on the sidelines to deploy when the market crashes.
In addition, it's not one big bet on AI.
They own a lot of companies that are hard for AI to disrupt.
Think about their railroad companies, energy, Clayton Homes, ...
You get Greg Abel allocating capital for you.
The man Warren Buffett picked himself.
Berkshire is also available at a much more reasonable valuation than the S&P 500.
We know that Greg Abel thinks Berkshire Hathaway is undervalued, as he started buying back the stock.
Christopher Bloomstran estimates Berkshire Hathaway B shares to be worth between $560 and $580 in his most recent letter (current stock price: $475).
Berkshire has more than $300 billion in cash to deploy when attractive opportunities arise.
If you want a diversified U.S. investment that isn't tied to big tech and AI, Berkshire Hathaway is an interesting idea.
ETF Portfolio Update: April 2026
Our ETF Portfolio is a great mix of ETFs that should be able to outperform in the long term.
We use multiple factors that tend to do well:
Quality: Only invest in companies that have already won Size: The smaller the better Multifactor: Quality, size, value & momentum Emerging Markets: Small exposure to Emerging Markets
Let's now dive into the ETF Portfolio itself.
You have 24/7 access to the ETF Portfolio here.
Please note there's a portfolio for Americans.
And another one for non-Americans.
Why?
If you live in the US, you can't buy non-US ETFs.
And if you live outside the US, you can't buy US ETFs.
American ETF Portfolio
The American ETF Portfolio is invested in these ETFs:
[Table image — American ETF Portfolio weights: Vanguard Small-Cap ETF 21.8%; WisdomTree Emerging Markets Multifactor Fund 19.0%; Invesco S&P 500 Equal Weight ETF 17.1%; VanEck Morningstar Wide Moat ETF 11.6%; Invesco S&P MidCap Quality ETF 10.7%; Tema Durable Quality ETF 10.4%; iShares MSCI USA Min Vol Factor ETF 9.3%]
The performance looks as follows:
[Image — American ETF Portfolio performance]
The return per transaction looks as follows:
[Table image — American ETF Portfolio, return per transaction (Date / ETF / Q / Price / Value / Current stock price / Current Value / Profit/Loss / Profit/Loss %): 10/13/2023 Invesco S&P 500 Equal Weight ETF / 3.56 / $140.3 / $499.47 / $203.41 / $724.14 / $224.67 / 44.98% 11/10/2023 VanEck Morningstar Wide Moat ETF / 6.80 / $73.5 / $499.80 / $101.65 / $691.22 / $191.42 / 38.30% 12/15/2023 Vanguard Small-Cap ETF / 2.35 / $212.8 / $500.01 / $286.53 / $673.35 / $173.34 / 34.67% 1/19/2024 Invesco S&P MidCap Quality ETF / 5.59 / $89.4 / $499.75 / $110.06 / $615.24 / $115.49 / 23.11% 2/9/2024 WisdomTree Emerging Markets Multifactor Fund / 19.72 / $25.4 / $500.89 / $37.37 / $736.94 / $236.05 / 47.13% 3/25/2024 Vanguard Small-Cap ETF / 2.23 / $224.6 / $500.77 / $286.53 / $638.96 / $138.19 / 27.60% 4/26/2024 VanEck Morningstar Wide Moat ETF / 5.83 / $85.8 / $500.10 / $101.65 / $592.62 / $92.52 / 18.50% 5/31/2024 Invesco S&P 500 Equal Weight ETF / 3.05 / $164.0 / $500.08 / $203.41 / $620.40 / $120.32 / 24.06% 6/21/2024 WisdomTree Emerging Markets Multifactor Fund / 18.07 / $27.7 / $500.00 / $37.37 / $675.28 / $175.28 / 35.06% 7/26/2024 Invesco S&P MidCap Quality ETF / 5.16 / $96.9 / $499.80 / $110.06 / $567.91 / $68.11 / 13.63% 10/18/2024 Vanguard Small-Cap ETF / 2.06 / $242.7 / $500.00 / $286.53 / $590.25 / $90.25 / 18.05% 11/15/2024 WisdomTree Emerging Markets Multifactor Fund / 18.62 / $26.9 / $500.13 / $37.37 / $695.83 / $195.70 / 39.13% 3/7/2025 Tema Durable Quality ETF / 15.41 / $32.45 / $500.05 / $38.27 / $589.74 / $89.69 / 17.94% 4/25/2025 iShares MSCI USA Min Vol Factor ETF / 5.51 / $90.70 / $499.76 / $94.19 / $518.99 / $19.23 / 3.85% 7/7/2025 Invesco S&P 500 Equal Weight ETF / 2.71 / $184.75 / $500.00 / $203.41 / $550.50 / $50.50 / 10.10% 8/8/2025 Tema Durable Quality ETF / 14.74 / $33.92 / $500.00 / $38.27 / $564.12 / $64.12 / 12.82% 2/20/2026 Vanguard Small-Cap ETF / 1.80 / $277.32 / $500.00 / $286.53 / $516.61 / $16.61 / 3.32% 3/30/2026 iShares MSCI USA Min Vol Factor ETF / 5.45 / $91.78 / $500.00 / $94.19 / $513.13 / $13.13 / 2.63% Final value (5/7/2026): $11,075.21. CAGR: 13.5%]
Non-American ETF Portfolio
The Non-American ETF Portfolio is currently invested in these ETFs:
[Table image — Non-American ETF Portfolio weights: iShares S&P 500 Equal Weight 20.9%; iShares MSCI World Small Cap 18.0%; iShares Edge MSCI World Multifactor 17.2%; iShares Core MSCI Emerging Markets 15.7%; iShares S&P 500 Equal Weight (second line) 14.8%; VanEck Morningstar Global Wide Moat 13.4%]
The performance looks like this:
[Image — Non-American ETF Portfolio performance]
The return per transaction looks as follows:
[Table image — Non-American ETF Portfolio, return per transaction (Date / ETF / Q / Price / Value / Current stock price / Current Value / Profit/Loss / Profit/Loss %): 10/13/2023 iShares S&P 500 Equal Weight / 101.00 / EUR 4.95 / EUR 499.95 / EUR 7.42 / $749.42 / $249.47 / 49.90% 11/10/2023 iShares MSCI World Small Cap / 89.00 / EUR 5.62 / EUR 500.18 / EUR 8.65 / $769.67 / $269.49 / 53.88% 12/15/2023 VanEck Morningstar Global Wide Moat / 21.20 / EUR 23.58 / EUR 499.90 / EUR 31.84 / $674.94 / $175.04 / 35.02% 1/19/2024 iShares Edge MSCI World Multifactor / 55.13 / EUR 9.07 / EUR 500.03 / EUR 15.36 / $846.80 / $346.77 / 69.35% 2/9/2024 iShares Core MSCI Emerging Markets / 17.23 / EUR 29.02 / EUR 500.01 / EUR 46.78 / $806.02 / $306.00 / 61.20% 3/25/2024 VanEck Morningstar Global Wide Moat / 19.80 / EUR 25.25 / EUR 499.95 / EUR 31.84 / $630.37 / $130.42 / 26.09% 4/26/2024 iShares MSCI World Small Cap / 78.48 / EUR 6.37 / EUR 500.00 / EUR 8.65 / $678.70 / $178.70 / 35.74% 5/31/2024 iShares S&P 500 Equal Weight / 87.00 / EUR 5.76 / EUR 501.12 / EUR 7.42 / $645.54 / $144.42 / 28.82% 6/21/2024 iShares Core MSCI Emerging Markets / 15.53 / EUR 32.20 / EUR 500.07 / EUR 46.78 / $726.49 / $226.43 / 45.28% 7/26/2024 iShares Edge MSCI World Multifactor / 46.73 / EUR 10.70 / EUR 500.01 / EUR 15.36 / $717.77 / $217.76 / 43.55% 10/18/2024 iShares MSCI World Small Cap / 73.00 / EUR 6.85 / EUR 500.05 / EUR 8.65 / $631.30 / $131.25 / 26.25% 11/14/2024 iShares Edge MSCI World Multifactor / 43.86 / EUR 11.40 / EUR 500.00 / EUR 15.36 / $673.69 / $173.69 / 34.74% 3/7/2025 VanEck Morningstar Global Wide Moat / 16.95 / EUR 29.50 / EUR 500.03 / EUR 31.84 / $539.63 / $39.61 / 7.92% 4/25/2025 iShares Edge MSCI World Minimum Volatility UCITS ETF / 8.00 / EUR 62.63 / EUR 501.04 / EUR 73.49 / $587.92 / $86.88 / 17.34% 7/7/2025 iShares S&P 500 Equal Weight / 75.64 / EUR 6.61 / EUR 500.00 / EUR 7.42 / $561.27 / $61.27 / 12.25% 8/8/2025 iShares Edge MSCI World Minimum Volatility UCITS ETF / 8.02 / EUR 62.32 / EUR 500.00 / EUR 73.49 / $589.62 / $89.62 / 17.92% 10/30/2025 iShares Core MSCI Emerging Markets / 12.84 / EUR 38.94 / EUR 500.00 / EUR 46.78 / $600.67 / $100.67 / 20.13% 2/20/2026 iShares MSCI World Small Cap / 59.45 / EUR 8.41 / EUR 500.00 / EUR 8.65 / $514.15 / $14.15 / 2.83% 3/30/2026 iShares Edge MSCI World Minimum Volatility UCITS ETF / 6.60 / EUR 75.72 / EUR 500.00 / EUR 73.49 / $485.27 / -$14.73 / -2.95% Final value (5/7/2026): $12,429.24. CAGR: 18.4%]
Overall, our Non-American ETF Portfolio is currently slightly outperforming the American one.
Over time, I expect both portfolios to generate similar returns.
New transaction
On Monday, at the opening, we will add to our ETF Portfolio.
Warren Buffett always buys companies with moats.
We'll add some to our Wide Moat stocks.
For Americans:
Buy VanEck Morningstar Wide Moat ETF ($MOAT) for $500
Current stock price: $100.80
For Non-Americans:
Buy VanEck Morningstar Global Wide Moat ETF ($GOAT) for EUR 500
Current stock price: EUR 31.61
Everything In Life Compounds Team Compounding Quality
Book
Order your copy of The Art of Quality Investing here
Used sources
Interactive Brokers: Portfolio data and executing all transactions
Fiscal.ai: Financial data
Disclaimer As a reader of Compounding Quality, you agree with our disclaimer.