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The S&P 500 Remains Relevant at 60

The index is still a strong brand in an increasingly commoditized industry.

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As John Rekenthaler discussed last week, Warren Buffett once again extolled the virtues of indexing in his recent  Berkshire Hathaway (BRK.B) shareholder letter and reiterated his recommendation of  Vanguard 500 Index (VFINX) as his preferred vehicle. Buffett also lionizes Vanguard founder Jack Bogle, who introduced the first retail S&P 500 index fund in 1976. (He even calls for a statue to be built in Bogle’s honor. However, I’m sure readers have notified Buffett that Vanguard erected a Bogle statue on its campus years ago.)

What strikes me is not that Buffett recommends indexing for most investors, but that he recommends an S&P 500 fund in particular. For years, the S&P 500, which celebrated its 60th anniversary on March 4, was synonymous with indexing. A whole ecosystem has sprung up around the benchmark. There are futures (even mini ones), options, and other instruments (that is, the VIX) that all reference this index.

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Kevin McDevitt has a position in the following securities mentioned above: VINIX. Find out about Morningstar’s editorial policies.