Warren Buffett’s returns were beaten by this investment strategy
Warren Buffett discusses EU and Monetary Union in 2011
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Warren Buffett has been revered as an investing guru for decades. Buffett’s success as an investor is seemingly unmatched, as he has built an enormous fortune over many years. There is no doubt that the CEO of Berkshire Hathaway is one of the most successful investors in the world, performing consistently over a long period of time.
However, there are some investors who have outperformed Buffett.
In fact, five fund managers have overseen greater investment success than the 90-year-old since 2001.
According to wealth manager AJ Bell, 186 different investment funds and trusts have produced bigger returns than that of Berkshire Hathaway over that period.
These successful investors have taken a different approach to Buffett, investing in riskier propositions than the American typically gets involved with.
The strategy used by Buffett is to invest in reliable companies and hold on to his stocks for a long period of time.
It is a simple technique, but one that has proven to be extremely profitable.
In his younger days, Buffett would invest in riskier propositions, such as companies that were going through troubled times.
He would then sell his shares when the price improved.
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However, the mainstay of his investment strategy has been putting his trust (and his money) into solid companies which are expected to continue to thrive regardless of any external factors.
In this way, Buffett has produced excellent returns over the long term with a relatively low-risk method.
The stock market can be very volatile, but Buffett has managed to avoid much of the murky waters and thrive with these reliable investments.
Berkshire Hathaway owns large minority stakes in many different companies like Coca Cola and American Express.
These are just two examples of companies that have consistently performed year after year.
However, by embracing the riskier side of investing, some managers have produced better returns than Buffett over a long period.
James Anderson is the best example of this. He has overseen Scottish Mortgage Trust since 2000, and has eclipsed the returns posted by Buffett.
An investment of £100 with the investment trust 20 years ago would now be worth £2,468.80, a return on investment of a whopping 246.88 percent.
In contrast, an investment of £100 with Berkshire Hathaway would now be worth £620.40.
Anderson has achieved these gains for investors by successfully identifying the companies which will produce the most growth.
Businesses such as Amazon and Tesla have been big hits for Anderson.
Some of the other top investors have more closely mirrored the strategy used by Buffett, which of course is a tried and tested formula.
But the success of Anderson shows that there is more than one way to be successful as an investor.
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