CONSIDERING BERKSHIRE AFTER BUFFETT

Should you explore one of a handful of Berkshire Hathaway clones or copycat funds?

- DAVID MILSTEAD

WHEN a CEO is in his nineties, you'd think investors wouldn't be caught off guard when he says it's time to hang it up. But Mr. Market seems to be displeased by Warren Buffett's announcement in May that he would hand over the reins at Berkshire Hathaway at the end of 2025. (Buffett, who turned 95 on August 30, will remain as chairman.) Since that day, Berkshire's “B” shares have fallen 12.6%—even as the broader market notched new highs, with the S&P 500 index returning 11.8%. (Prices and returns are as of July 31, unless otherwise noted.)

You may be wondering if there's an alternative to a post-Buffett Berkshire. A few Berkshire Hathaway clones are on the market—firms with insurance at their core and portfolios of businesses and stocks built for long-term returns. Some funds either explicitly or implicitly follow the Warren Buffett way. We looked at some of the options below. Fair warning: Replacing Buffett may be as difficult for your portfolio as it is for Berkshire.

Very little of the Berkshire transition was a surprise. Buffett has had stock-picking help for some time from Berkshire execs Ted Weschler and Todd Combs. And Greg Abel, the man Buffett tapped as the next CEO, was first named a potential successor in January 2018. But Abel built his career as an energy executive, not a portfolio builder.

That seems to have spooked Buffett acolytes, who wonder whether Berkshire's magical long-run returns—a compounded 19.9% from 1965 through 2024—can continue.

“Buffett is able to take his huge balance sheets and turn $1 into $2,” says Vitaliy Katsenelson, a money manager and author of The Intellectual Investor. “I don’t know how good Greg Abel is.”