Cramer backs index funds over Berkshire for inheritance

Jim Cramer advised a California father to use broad funds, not only Berkshire Hathaway Class B shares, for a two-child inheritance with a 20- to 30-year horizon, TheStreet reported Oct. 24.

The advice cuts against Berkshire’s long record: citing Berkshire’s 2025 annual report, the article said the company gained 19.7% annualized from 1965 through 2025, versus 10.5% for the S&P 500 including dividends.

The caller, identified as Michael from California, asked Cramer whether Berkshire Hathaway Class B shares or a Vanguard exchange-traded fund better suited money intended for his children decades from now. An exchange-traded fund is a listed fund that holds a basket of securities.

“I think the S&P 500 fund and the total return funds are both really good for that kind of situation, Vanguard’s total return,” Cramer said, according to TheStreet’s account of the CNBC Mad Money exchange.

Cramer framed the issue as concentration risk, not a rejection of Warren Buffett. “The one thing I would caution is, it’s my opinion as much as I like Warren Buffett,” Cramer said, before discussing the need for a broader basket when holding an individual stock.

Berkshire remains one of the best-known long-term compounding stories in U.S. equities. TheStreet said Buffett built the company from a struggling textile manufacturer into a conglomerate spanning GEICO insurance, BNSF Railway, energy, manufacturing, retail and a large stock portfolio.

The more recent comparison was less favorable for Berkshire, according to figures TheStreet attributed to TotalRealReturns. From September 2010 through Oct. 22, 2026, $10,000 in Berkshire Class B became about $66,450, compared with about $88,040 in Vanguard Total Stock Market ETF and $92,780 in Vanguard S&P 500 ETF, with distributions reinvested.

That period does not settle the long-term question. TheStreet said Berkshire outperformed the index in 2022, while index funds still expose investors to broad market declines.

The article also pointed to Buffett’s own family-planning guidance. In his 2013 shareholder letter, Buffett said the trust for his wife should hold 90% in a low-cost S&P 500 index fund, suggesting Vanguard, and 10% in short-term government bonds.

Berkshire’s succession adds another variable for investors using the stock as a long-term family asset. Atlas360 reported in September that Berkshire named Howard Buffett chairman after Warren Buffett stepped down, separating the chair and chief executive roles at the $1 trillion conglomerate.

Greg Abel, Berkshire’s chief executive, has resumed buybacks after an almost two-year pause, TheStreet said, citing $4.8 billion of repurchases in the first half of 2026. It also said Berkshire invested $10 billion in Alphabet and completed a $6.8 billion acquisition of homebuilder Taylor Morrison in July.

Abel defended the repurchases in a March CNBC Squawk Box appearance. “we see value, the intrinsic value exceeds the current market value,” he said, according to the CNBC transcript cited by TheStreet.

Berkshire’s second-quarter operating earnings rose 16% to nearly $13 billion, TheStreet said, while cash and Treasury bills in its insurance and other businesses stood at $359.2 billion at June 30.