Warren Buffett-led Berkshire Hathaway achieved a significant milestone in August, crossing $1 trillion in market cap for the first time. While the conglomerate is renowned for its investments in public companies such as Apple and Coca-Cola, the true value lies beyond these equities. Berkshire’s diverse portfolio includes property and casualty insurance segments, BNSF Railway ownership, Berkshire Hathaway Energy, various businesses in manufacturing, services, and retailing, and a substantial $79.41 billion stake in Bank of America, American Express, Visa, and Mastercard.

The financial sector is the second most valuable sector in the S&P 500 after technology, constituting 13.3% of the index. It comprises a broad spectrum of businesses, including big banks, regional banks, investment banking, insurance providers, payment processors, and financial exchanges.

Within the financial sector, diversification is crucial. While some segments benefit from economic growth, others thrive under differing conditions. For instance, banks may prefer higher interest rates for increased interest income, while credit card companies thrive on transaction volumes and value. Similarly, investment banks may favor lower capital costs for merger activity, contrasting with insurance companies reliant on regulatory environments.

The Vanguard Financials ETF offers investors a simple and low-cost opportunity to access a mix of growth, income, and value stocks within the financial sector. With a mere 0.1% expense ratio, a 16.3 price-to-earnings ratio, and a 1.8% yield, this ETF presents an attractive investment avenue amidst the sector’s inexpensive valuations. The fund has shown a 20% year-to-date growth, demonstrating its potential.

The Vanguard Financials ETF boasts a diverse portfolio of leading financial companies, presenting a balanced investment approach. From JPMorgan Chase and Berkshire Hathaway to Mastercard, Visa, and Bank of America, the fund’s top 10 holdings represent a strategic mix across different financial industry segments.

The Vanguard Financials ETF serves as an effective tool for gaining exposure to Berkshire Hathaway and other prominent financial stocks. While this ETF offers a well-rounded approach, some investors may opt to complement it with individual stock holdings for enhanced exposure to specific companies, such as Visa, Mastercard, and American Express, within the payment processing sector.