Berkshire Hathaway as an alternative to an ETF?

A

alwaysonit

Registered User
Messages
137
I think it has been mentioned before that Berkshire Hathaway is a good alternative, as there is no deemed disposal, and we are only taxed when we sell.

However, this stock being a conglomerate gives far more diversification than a run of the mill stand alone stock.

Are there any better options? Or other conglomerate/stocks that we could combine with Berkshire Hathaway to provide ourselves with more diversification?
 
That's the approach that I took in April 2021 (serendipitous timing! :)) when I invested in BRK.B and MKL (Markel), given that the taxation and administration of ETFs were too complicated and onerous for me. And I had had some money doing nothing for a while such that waiting to find the non-existent "perfect" solution rather than one that was suitable for my needs on many levels would've been dumb (and I've been dumb/distracted for too many years :confused: ). I see these investments as a c. 10 year, proxy ETF investment, and supplementary pension fund (having already maxed the actual pension). Obviously there are some caveats, such as them being largely US investments and subject to currency exchange fluctuations (tell me about it lately! :oops:) but they may suit some people's needs. I did look into other similar conglomerate stocks and may still invest in others at some stage. Although, if ETFs generally eventually become subject to the same taxation as regular shares, I will obviously look at them again. Just my tuppence for what it's worth... :)
 
Last edited:
Among those "caveats" is the US Estate Tax if you die.

A cofounder of Moneycube.ie did an AMA on Reddit yesterday. One of the things he said was that he has unfortunately not detected any move towards treating ETFs like regular shares, so we may be overly optimistic in hoping that it might happen soon. For distributing ETFs I cannot see any reason to treat them differently from regular shares. For accumulating ETFs it seems so much cleaner for people to pay income tax on dividends even though those dividends are reinvested, and then they could also be treated like regular shares.
 
Lamps said:
Also consider investment trusts like Mnks, FCIT, JAM, SMT etc. They're treated like shares for taxation purposes and are much more diversified than BRK. Last time I checked BRK was about 45% Apple. I wasn't comfortable with that myself.
Click to expand...
I'd rather be 45% Apple than diversified.
 
basilbrush said:
Among those "caveats" is the US Estate Tax if you die.

A cofounder of Moneycube.ie did an AMA on Reddit yesterday. One of the things he said was that he has unfortunately not detected any move towards treating ETFs like regular shares, so we may be overly optimistic in hoping that it might happen soon. For distributing ETFs I cannot see any reason to treat them differently from regular shares. For accumulating ETFs it seems so much cleaner for people to pay income tax on dividends even though those dividends are reinvested, and then they could also be treated like regular shares.
Click to expand...
Can you please explain the US estate tax? I'd been using BRK.B exactly as the OP said, and I wasn't aware of this.
 
tinymouse said:
Can you please explain the US estate tax? I'd been using BRK.B exactly as the OP said, and I wasn't aware of this.
Click to expand...
Basically, if you own more than $60k of US assets (e.g. US shares) and you die there’s a US Estate Tax hit even if your spouse is inheriting the assets. The rate rises to 40% pretty quickly.
 
Lamps said:
Last time I checked BRK was about 45% Apple.
Click to expand...
I haven't checked what % Apple is within BRK but it's important to remember that what you are referring to is the % of Berkshires Investing portfolios. But Berkshire fully owns a huge number of businesses that do not appear on its investing portfolio, including truly huge companies like Geiko, Berkshire Hathaway Energy and BNSF. Berkshire is far more diversified than its investment portfolio would suggest. Berkshire is definitely a good substitute for a US ETF.

Lamps said:
Also consider investment trusts like Mnks, FCIT, JAM, SMT etc. They're treated like shares for taxation purposes
Click to expand...
Investment Trusts are also a good alternative.
 
settlement said:
I half about half my portfolio in brk b and the other half in 7 tech stocks (not aapl obviously). Allows me reasonable diversification
Click to expand...
That's not diversification though far from it. What about energy, industrials , food , agriculture, commodities ,health care etc , all areas that are rising rapidly in price now due to inflation. Technology companies are not diversified and are actually being affected negatively by inflation
 
joe sod said:
That's not diversification though far from it. What about energy, industrials , food , agriculture, commodities ,health care etc , all areas that are rising rapidly in price now due to inflation. Technology companies are not diversified and are actually being affected negatively by inflation
Click to expand...
Berkshire has considerable energy holdings, 100 billion by some estimates.

I don't claim to be fully diversified, I am simply stating it is a reasonable alternative to buying the s&p, which I refuse to do due to the taxation issues. Fwiw, I'm comfortably outperforming the s&p over the last couple of years, not that I imagine or expect that to continue
 
basilbrush said:
Among those "caveats" is the US Estate Tax if you die.
Click to expand...
Great point and one I am not happy to take on.
Seems we would be limited to only invest in conglomerates that are non-US which rules out a great chunk.

Horatio said:
Here's a list that might be worth a look:
companiesmarketcap.com

Largest conglomerate companies by Market Cap

List of the largest conglomerate companies by market capitalization, all rankings are updated daily.
companiesmarketcap.com companiesmarketcap.com
Click to expand...
Why is Berkshire not on this list?
 
alwaysonit said:
Great point and one I am not happy to take on.
Seems we would be limited to only invest in conglomerates that are non-US which rules out a great chunk.


Why is Berkshire not on this list?
Click to expand...
In practice how can the US enforce their Estate tax? I can see how it would work on real estate property in the US as it could be demanded during the legal process of the sale, but shares?

Let's say someone owns BRK via the German stock market - their login details are shared with the spouse or family, the owner dies, how could the share dealing platform or US revenue learn about it in time to withhold the tax. I doubt there's any automatic transfer of information between the US and Ireland on deaths, or from Ireland via Germany to the US.

If they can't automatically withhold the tax, I can't see how they'd expect to be paid, unless Irish Revenue do the dirty work for them. Presumably if you wanted to visit or work in the US you'd not like a tax demand hanging over you, but if you were happy to never visit the US...
 
Lamps said:
Also consider investment trusts like Mnks, FCIT, JAM, SMT etc. They're treated like shares for taxation purposes and are much more diversified than BRK.
Click to expand...
What does the AAM brain trust say on these? To me they seem like much better alternatives to Berkshire - no estate tax, no concerns about what happens when Buffet is no longer involved etc. Is Sterling currency risk the only downside compared to buying say an S&P500 ETF?
 
You must log in or register to reply here.
Back
Top