Berkshire Portfolio Shift Disrupts VistaShares' OMAH ETF

The VistaShares Target 15 Berkshire Select Income ETF (OMAH) is facing a significant issue: its underlying portfolio, which mirrors Warren Buffett's disclosed equity holdings, is rapidly changing. In his first full quarter as CEO of day-to-day operations at Berkshire, Greg Abel oversaw the exit of 16 positions, including Amazon and Visa. The holding count fell from around 40 to 29, with Alphabet's stake being tripled. This change in portfolio composition raises questions about whether OMAH still belongs in investors' portfolios.

As a mechanical replication vehicle, OMAH reads Berkshire's quarterly 13F filings and rebalances its portfolio accordingly. The fund has a 0.98% expense ratio, which may be too high given the current state of the underlying index. The 13F reporting lag, which was previously considered minor, is now a significant issue due to the rapid changes in Berkshire's portfolio.

For investors who bought OMAH for its frozen Buffett exposure, the fund no longer meets their expectations. However, for those who see it as an income vehicle, collateralized by high-quality American equities selected by Berkshire's investment office, including current Chairman Abel, the case remains intact. The fund's 10% one-year return suggests that the strategy is functional during this transition period.