When Warren Buffett Runs Your Pension Plan

For Warren Buffett, taking the road less traveled has often led to better investment returns. One often overlooked example: how he’s approached the $15 billion in pension plan assets at his conglomerate, Berkshire Hathaway Inc. Over the next several weeks, subsidiaries such as the Buffalo News and Geico will likely file detailed reports to the U.S. Department of Labor about their plans. The documents make for dry reading. But they reveal a strategy that’s unlike just about any other company’s.

Most pension plans invest in a broad array of stocks and bonds, plus private equity and real estate. They do so, in part, because plans are legally obligated to be managed in the best interests of participants, and one way to avoid uncomfortable questions about their investment choices is to follow the conventional wisdom to diversify. At Berkshire, many of the funds are far more concentrated, often with fewer than 20 stocks backing each plan. With interest rates so low, they stay away from fixed income. Buffett summed up the strategy in 2014 in a CNBC interview: “We’re all equities. … We don’t have any bonds in our pension funds.”