Warren Buffett’s Berkshire Hathaway Sharpe ratio (an index measuring returns adjusted by price fluctuations) is the best among stock funds, an economic study of the U.S. National Bureau of Economic Research has found recently. The NBER has not studied other funds though.
According to the NBER’s estimates, the Sharpe ratio of Berkshire Hathaway's portfolio has been 0.76 since 1976. For comparison, the average market rate is 0.39. The average ratio of all mutual funds’ portfolios traded within the last 30 years has been out at the level of 0.37.
Separately, the researchers analyzed the dynamics of the shares prices of the companies Warren Buffett invests in. The result revealed that the head of Berkshire received high returns mainly due to investments in qualitative stocks, not to the participation in the management.
The mass media often call Buffett the greatest investor in the world, but until now it was confirmed only by the researches of single achievements of Berkshire.
Warren Buffett has a fortune of $58.5 billion and occupies the fourth place in the Forbes list. The investor is well-known for his simple life, despite billions of dollars he has. Buffett still lives in a house he bought in the late 60’s for $30 000. His salary in Berkshire has been $100 000 a year for 25 years. He receives his main income from personal investments in stocks.
Moreover, Berkshire Hathaway’s head is a philanthropist, he is one of the initiators of The Giving Pledge. Billionaires taking part in the campaign commit to donate at least half of their wealth. Buffett promised to give 99 percent of his earnings.
