Here Are 3 ETFs Warren Buffett Would Approve Of for the Average Investor

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Everybody wants to invest like Warren Buffett, and rightfully so. The Omaha of Nebraska has amassed a fortune of $145.3 billion as of mid-2025 since making his first investment at the ripe age of 11. Now that he’s 94 years old, Buffett has become better with age, making him one of the most successful investors who ever lived. Fortunately, Buffett has shared investment nuggets along the way from which investors can glean to build their own winning strategies, formulas that fit both their risk tolerance, financial goals and budget. 

While Buffett is known for investing in individual stocks, those whose business models are simple enough to understand, he is ultimately an investor who is in it for the long haul. Similarly, ETFs are designed to let investors ride the market wave without having to make frequent changes if they don’t want to. That is why we believe we’ve identified three ETFs that Buffett himself would approve of for the average investor in July.  

iShares U.S. Financials ETF (IYF)

Considering Warren Buffett’s inaugural investment was famously in a bank—Cities Service preferred shares—and financial institutions remain a lighthouse for his investment decisions, it makes sense to begin our exploration here. Our first pick: the iShares U.S. Financials ETF (IYF). And with Buffett’s own Berkshire Hathaway counted among this ETF’s top holdings, it would likely appeal to the Oracle of Omaha. In addition to banks, IYF targets exposure to the insurance sector, playing into the hands of Buffett’s affinity for insurance, which he has called the “engine” that has powered Berkshire Hathaway’s performance for decades.

The IYF ETF boasts a lineup of colossal financial institutions like JPMorgan (NYSE: JPM), Bank of America (NYSE: BAC) and Wells Fargo (NYSE: WFC), offering investors access to stable banks renowned for their robust balance sheets. These titans of finance have a demonstrated history of navigating—and profiting through—evolving market cycles. This resilience can significantly benefit investors, especially when these institutions commit to enhancing shareholder value through activities like stock buybacks.

Even in economic climates with elevated interest rates, banks often find an advantage, benefiting from higher loan rates for borrowers while simultaneously attracting savers with compelling yields. Investors have also been betting on the likelihood of lower interest rates, a phenomenon that could take hold as soon as July at the next Fed meeting. This optimism has benefited the iShares U.S. Financials ETF, sending the fund to revisit its 52-week high level of approximately $123 recently, offering investors an opportunity to potentially ride this wave in July. 

As of early July, the IYF ETF has delivered returns of 10.8%, nearly doubling the S&P 500’s returns of 6.75% over the same stretch. Over the past year, this financials ETF boasts a total return of 19.5%, in line with its benchmark index, the Russell 1000 Financials 40 Act 15/22.5 Daily Capped Index (USD). With an expense ratio of 0.39%, investors won’t have to worry about having to overpay: If you invest $10,000 in IYF, you would pay approximately $39 in fees per year. 

Schwab U.S. Dividend Equity ETF (SCHD)

Next up is the Schwab U.S. Dividend Equity ETF (SCHD). Not only does this ETF deliver consistent income, but one of its core components is yet another Warren Buffett favorite: Coca-Cola (NYSE: KO). The iconic beverage giant commands a 4.3% slice of the SCHD ETF, and remarkably, represents a whopping 9.7% of Berkshire Hathaway’s total portfolio. Within the SCHD ETF, Coca-Cola is joined by fellow dividend stalwarts like Verizon Communications (NYSE: VZ), Altria Group (NYSE: MO) and Lockheed Martin (NYSE: LMT). These companies have built reputations for consistently returning value to shareholders through robust dividends, making them almost a guaranteed fit for Buffett’s investing playbook. Their predictable cash flows and essential products underpin a long history of rewarding shareholders, a characteristic central to Buffett’s philosophy.

While Buffett’s company, Berkshire Hathaway, isn’t a dividend-paying stock itself, that certainly doesn’t mean he discounts their power. Buffett has openly championed dividend-paying stocks as a shrewd strategy for investors on the hunt for steady income. Perhaps the most convincing evidence lies in Berkshire Hathaway’s top holding—Coca-Cola—a stock that diligently pays a dividend, which Buffett has no intentions of selling anytime soon.

Its global brand power and consistent profitability make it a perpetual cash cow for Berkshire’s coffers. In early 2025, Coca-Cola announced its 63rd straight annual dividend hike, lifting its quarterly payout by 5.2% to $0.51 per share. Considering Buffett owns approximately 400 million shares of Coca-Cola stock, his company is effectively raking in over $800 million each year in dividend checks. Coca-Cola stock is also up 14.5% year-to-date, offering investors the added bonus of capital appreciation alongside their income.

As for the broader Schwab U.S. Dividend Equity ETF, it meticulously tracks the total return of the Dow Jones U.S. Dividend 100 Index. With an incredibly modest expense ratio of just 0.060%, the SCHD ETF boasts over 100 holdings, granting shareholders a strong degree of diversification for protection. The fund’s underlying strategy prioritizes quality over quantity, avoiding  risky high-yielding dividend stocks.

Instead, it favors companies with long, proven track records of reliable payouts, offering investors a more reliable income stream and reduced volatility. This disciplined approach means even when the fund’s overall value experiences a dip, as it appears to have done in this wild 2025, investors still receive the benefit of earning consistent income through dividend distributions—which, Buffett seems to agree, is the ultimate icing on the cake for dividend stock investors anyway.

Invesco QQQ Trust (QQQ)

The Invesco QQQ Trust (QQQ) is a popular ETF known for its exposure to some high-flying technology stocks, including Apple (Nasdaq: AAPL) and Amazon (Nasdaq: AMZN). In fact, most of its top-10 holdings are technology stocks, with the exception of Costco Wholesale (Nasdaq: COST). While Warren Buffett isn’t known for his technology prowess, favoring instead businesses with more simple models, he has warmed up to the technology sector in recent years. Today, Apple and Amazon comprise 21.7% and 0.8% of Berkshire Hathaway’s portfolio, respectively. 

Apple is one of only a handful of Buffett’s technology stocks, which he began adding nearly a decade ago. The billionaire investor dove in head first with a $1 billion investment, making the iPhone maker one of the top holdings of Berkshire’s portfolio. Today Apple remains a key holding, with Berkshire’s investment worth over $64 billion. Buffett also bemoaned his hesitancy to add Amazon stock sooner than he did, kicking himself for for being “too dumb.” But he won’t make that mistake twice, and his AMZN holdings are now worth $2.2 billion in the Berkshire portfolio.

Given their high-growth nature, the companies that make up the QQQ ETF are heavy capex spenders. While this strategy comes with an inherent amount of risk, which is the first group to be punished in challenging economic environments, the payoff can be equally as rewarding. And when it comes to capital appreciation, QQQ doesn’t disappoint. The QQQ ETF has delivered impressive long-term returns, outshining the S&P 500 in seven out of the past 10 years. Investors who directed $10,000 invested in Invesco QQQ in 2020 would have seen their investment balloon to approximately $22,976 today. 

So far in 2025, QQQ posted a strong year-to-date gain of approximately 8%; at this pace, it will replicate last year’s returns of approximately 16%. Investors also receive a rather efficient expense ratio of just 0.20%, making it a cost-effective investment vehicle for access to Big Tech stocks, among other sector leaders. Investors with an appetite for risk and growth might find the QQQ appealing while also seizing the opportunity to hold a couple of Warren Buffett favorites.

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