Warren Buffett Recommended This Vanguard Index Fund in 2014. Here's How Much You Would've Made Had You Listened

Key Points

• Warren Buffett has steered Berkshire Hathaway to market-beating returns since 1965.

• Buffett knows most people aren't in a position to replicate his stock-picking strategies, so he often recommends that retail investors buy an S&P 500 index fund instead of picking individual stocks.

• Buffett recommended the Vanguard S&P 500 ETF back in 2014.

• 10 stocks we like better than Vanguard S&P 500 ETF ›

Warren Buffett is one of the world's most successful investors. He took control of a struggling textiles enterprise called Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) in 1965, and after realizing he couldn't save its core business, he turned it into a holding company for what became a wide range of wholly owned businesses and other investments. Buffett and his team now oversee dozens of subsidiaries, as well as a portfolio of stocks and securities currently valued at $305 billion.

His ability to identify companies with strong management teams that were capable of delivering steady growth and reliable profits has helped him grow Berkshire into a $1 trillion conglomerate. But as an experienced professional investor, he knows the average person would struggle to replicate the tactics and strategies that underpinned his success. That's why he often recommends that rather than trying to pick individual stocks, most of us should simply buy an exchange-traded fund (ETF) that tracks the performance of a diversified index like the S&P 500 (SNPINDEX: ^GSPC).

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Back in February 2014, Buffett specifically suggested the Vanguard S&P 500 ETF (NYSEMKT: VOO) because of its ultra-low cost.

Image source: The Motley Fool.

The ideal ETF for investors of all experience levels

The S&P 500 has 500 component companies, chosen based on a specific set of criteria. To earn inclusion, a company must have a market capitalization of at least $22.7 billion, it must trade on a U.S. exchange, and it must also be profitable, among other things.

But even after ticking those boxes, admission is at the discretion of a special committee that meets once per quarter, ensuring only the highest-quality candidates make the cut.

The companies in the index operate in all the sectors of the economy, so it's diversified. However, it has become top-heavy because of the increasing dominance of the technology sector, which is home to the world's three largest companies: Nvidia, Microsoft, and Apple. They have a combined value of around $11.7 trillion. That's a big piece of the overall index's value of about $56 trillion.

Here are the five largest sectors in the S&P 500, along with their weightings, and a few of the most noteworthy stocks within them:

Data source: State Street. Sector weightings are accurate as of Sept. 18, 2025, and are subject to change.

Investors who buy an S&P 500 index fund like the Vanguard S&P 500 ETF will have ample exposure to hypergrowth trends like artificial intelligence (AI), but will also keep their risk under control thanks to its diversification. Here's what investors would have earned over the last 11.5 years had they listened to Buffett and bought in when he suggested it.

An eye-popping return since 2014

The S&P 500 has delivered a compound annual return of 13.4% since Buffett recommended the Vanguard ETF in early 2014. An investor who parked $10,000 in the ETF back then would be sitting on a position worth about $43,000 today, assuming they reinvested their dividends along the way -- a fantastic result for what is typically a set-and-forget asset.

Investors who made small, consistent contributions to the Vanguard ETF also would have done extremely well.

Calculations by author.

None of the above figures account for management fees, but that is where the Vanguard S&P 500 ETF shines. Its expense ratio -- the proportion of investors' funds deducted each year to pay the fund managers -- is just 0.03%. That means on a balance of $10,000, an investor would incur an annual fee of just $3 -- a rather inconsequential sum considering the index's returns.

Vanguard points out that similar competing index funds have an average expense ratio of 0.74% -- almost 25 times more. Even the SPDR S&P 500 ETF Trust -- another popular low-cost S&P 500 index fund -- has an expense ratio of 0.09%. Higher fees tend to eat away at investors' returns over the long run.

The annual returns of 13.4% in the S&P 500 since 2014 have been higher than its long-term average of 10.5%, which dates back to 1957, when the index was established. Over the last decade, powerful trends in the technology space, including cloud computing, enterprise software, machine learning, and artificial intelligence, have driven stocks like Nvidia, Microsoft, and Apple to unusually strong returns, resulting in accelerated gains for the overall index.

Since the AI boom is still in its infancy, further above-average returns might be on the way for the S&P 500, so it probably isn't too late for investors to profitably park some money in the Vanguard S&P 500 ETF.

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JPMorgan Chase is an advertising partner of Motley Fool Money. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie, Alphabet, Amazon, Apple, Berkshire Hathaway, JPMorgan Chase, Meta Platforms, Microsoft, Netflix, Nvidia, Tesla, Vanguard S&P 500 ETF, and Visa. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.