ETF Model Portfolios: The Warren Buffett 90/10

90% in the S&P 500

Buffett has long been one of the most vocal advocates for the S&P 500 as a core holding. His reasoning is simple. Broad exposure to American businesses has historically been one of the most reliable ways to build wealth. As he famously put it, “never bet against America.”

That philosophy has shown up in Berkshire Hathaway’s own portfolio at times, with holdings in S&P 500 index funds alongside its individual stock positions. For most investors, though, Buffett has been clear that trying to pick stocks is unnecessary. A low-cost index fund does the job.

I prefer ETFs over mutual funds for implementing this. On average, they come with lower expense ratios, they trade throughout the day like stocks, and they are generally more tax-efficient due to the in-kind creation and redemption mechanism, which helps minimize capital gains distributions.

There is no shortage of S&P 500 ETFs, and Buffett has often pointed to Vanguard’s lineup. My preferred option is the State Street SPDR Portfolio S&P 500 ETF

.

Formerly known as SPLG, it recently changed its ticker and now stands as the lowest-cost option in the U.S. market with a 0.02% expense ratio. It is also well capitalized with $113 billion in assets under management and highly liquid, with a 0.01% 30-day median bid-ask spread.

Beyond cost, I like the S&P 500 itself as an index. While there is a committee involved, the inclusion criteria around market capitalization, liquidity, and consistent earnings introduce a mild quality screen. Combined with market-cap weighting, you also naturally capture momentum, as the winners become a larger share of the index over time.

10% in Treasury Bills

Buffett and Berkshire have always maintained a strong preference for cash. In the company’s latest disclosures, Berkshire holds roughly $373 billion in cash and cash equivalents.

A significant portion of that supports the insurance float, but Buffett has consistently emphasized the value of keeping dry powder available to deploy during market dislocations.

In this model, that philosophy is scaled down to a more practical 10% allocation, held in short-term U.S. Treasurys. While “short-term” can technically extend out to one to three years, I interpret Buffett’s intent as Treasury bills, which are securities with maturities of one year or less.

Treasury bills do not pay a coupon. Instead, they are issued at a discount and mature at face value, with the difference representing your return. When packaged inside an ETF, the constant rolling of maturing holdings results in regular income distributions, typically paid monthly.

For this sleeve, I prefer the State Street SPDR Bloomberg 3–12 Month T-Bill ETF

. It carries a 0.1354% expense ratio and has very low interest rate sensitivity, with a duration of just 0.37 years. With rate cuts currently on pause, the fund is still offering a solid 30-day SEC yield of 3.48%.

Putting It All Together

The portfolio is about as simple as it gets. Allocate 90% to SPYM and 10% to BILS, and rebalance once a year. The weighted average expense ratio comes out to just 0.032%, which is extremely low.

Over most backtests, this mix will lag a 100% S&P 500 allocation. That is expected, especially in strong bull markets where holding cash creates a drag. However, that 10% allocation to Treasury bills helps reduce volatility and improve risk-adjusted returns. You see this show up in a higher Sharpe ratio, as well as shallower drawdowns during market stress.

For investors who remain bullish on U.S. equities but want to take a small amount of risk off the table, this is a straightforward allocation that is easy to understand, easy to implement, and most importantly, easy to stick with over the long term.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.