A Surprising Buffett ETF


Plenty of well-known exchange traded funds can lay claim to being a Warren Buffett ETF. Looking at Berkshire Hathaway Inc.(NYSE:BRK-A)'s equity portfolio at the end of the first quarter, it is clear the Nebraska-based conglomerate has an affinity for financial services stocks.

Additionally, investors can choose among major consumer staples ETFs, including the Consumer Staples Select Sector SPDR (NYSE:XLP) and grab exposure to multiple Berkshire holdings. However, a brand new ETF focused on the new-fangled concept of mobile payments does not immediately come to mind as a Buffett ETF.

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A Buffett ETF

A closer look at the newly minted PureFunds ISE Mobile Payments ETF (NYSE: IPAY) reveals that the first dedicated mobile payments ETF has some credibility as a Buffett fund. IPAY, which debuted last month, follows the ISE Mobile Payments Index. That index tracks companies at the forefront of the mobile, electronic, and digital payments industry, according to astatement from PureFunds.

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Getting to the point of IPAY's utility as a Buffett ETF, the new fund features stakes in Dow component Visa Inc (NYSE:V), MasterCard Inc (NYSE:MA) and American Express (NYSE:AXP), another Dow stock. Those stocks are three of IPAY's four largest holdings and combine for 18.4 percent of the new ETF's weight, according to issuer data.

Berkshire Hathaway has long been one of the largest American Express shareholders and the conglomerate's most recent 13F filing revealed stakes in Visa and MasterCard with a modest trimming of its position in MasterCard.

What Else?

Of course, there are other reasons to consider IPAY in addition to the fund being home to three Berkshire Hathaway holdings.

The recent shift in the payments industry has been the transition away from the traditional payments methods and into mobile methods. It is commonly held that consumer spending accounts for approximately two thirds of U.S. Gross Domestic Product (GDP) which in real terms equates to roughly $11.5 trillion, according to PureFunds.

IPAY also has one of the largest stakes in PayPal Holdings Inc (NASDAQ:PYPL) among all ETFs. The newly public PayPal is IPAY's third-largest holding, just ahead of American Express, at 5.81 percent of the ETF's weight.

IPAY's underlying index holds 31 stocks hailing from four sub-industry groups. Seven countries are represented in the index, though the U.S. is by far the largest with a weight north of 84 percent. IPAY charges 0.75 percent per year.

The ETF has gained 1.2 percent since coming to market.

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