Warren Buffett has a reputation as a legendary investor for good reason.
Since 1965, the Oracle of Omaha has delivered incredible returns for Berkshire Hathaway (NYSE: BRK.B) shareholders.
And when I say incredible, I mean it. During this time, according to the most recent letter to shareholders, Buffett has achieved an average 19.8% per annum return.
That would have turned a $100 investment into approximately $3.8 million. Clearly, Warren Buffett is doing something right when it comes to investing.
Investing the Warren Buffett way with ASX shares
The good news is that there’s no quant trading or crazy strategies happening over at Berkshire Hathaway HQ.
Buffett has one of the simplest investment methods around, which means that anyone can attempt to follow in his footsteps.
One of the keys to his success has been his love of buying companies with wide economic moats.
If you want to invest for the long-term, you need your investments to stick around. If they don’t have moats, there’s a fair chance that they will disappear sooner than you’d like. Whereas a company with a sustainable moat could be around for multiple decades or even longer.
Back in 2007, Warren Buffett explained the importance of moats when he chooses investments. He explained:
A truly great business must have an enduring ‘moat’ that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business ‘castle’ that is earning high returns.
Therefore a formidable barrier such as a company’s being the low-cost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with ‘roman candles’, companies whose moats proved illusory and were soon crossed.
One way that investors can invest like Warren Buffett with limited effort is through the VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT).
This popular exchange-traded fund (ETF) has been designed to replicate the Berkshire Hathaway leader’s investment style. It gives investors access to a diversified portfolio of companies with sustainable competitive advantages and fair valuations.
Over the last 10 years, the index that the fund tracks has smashed the market with a 16.55% per annum return. I doubt this was a coincidence.
