Here’s what you need to know today

• Warren Buffett may have signed off with his final shareholder letter last week, but the show goes on at Berkshire Hathaway. The investment giant announced a $4.3 billion stake in Alphabet, the parent company of Google. This is a notable investment, as only the second time in Berkshire's history it has invested in a large US tech company, after Apple in 2016. (WSJ)
  
  

• Australian beef producers have been a surprise winner from America’s trade war. Australian beef exports to China rose 67% in the past year to $952 million in the September quarter. This comes as China’s imports of US beef dropped 94%. (AFR)
  
  

• Surprisingly, Australian beef exports to the US have also risen 26% after President Trump hit Brazil with a 50% tariff, handicapping Australia’s biggest rival to the US beef market. However, this is set to change after President Trump announced he would remove tariffs on hundreds of food products, including beef, in an effort to lower grocery costs. Major beef exporters will all lose their tariffs, once again levelling the playing field for Australia (10% tariff), Brazil (50%) and New Zealand (15%). (AFR)
  
  

• Australia’s last week in politics was all about the Liberal Party following the Nationals in dropping support for Australia’s Net Zero target. Now, the Nationals are pressuring the Liberals to have a more robust climate policy, including the adoption of an emissions reduction fund, to pay polluters to stop polluting. The Liberals will be feeling like they’re getting mixed messages from its junior coalition partner. (AFR)
  
  

• BHP has been found liable for a 2015 mine collapse in Brazil and will be required to compensate hundreds of thousands of victims. The UK High Court found BHP’s negligence caused the collapse of the Fundão Dam that killed 19 people and saw 40 million cubic metres of toxic waste flow on to villages below. Around 620,000 Brazilians were seeking more than £36 billion in compensation. (ABC)
  
  

• The UN has applied to make submissions in a case challenging the Australian government’s decision to approve the extension to Woodside’s North West Shelf gas project. The Australian Conservation Foundation is challenging the decision to allow operations to continue until 2070, with the UN Special Rapporteur on the Human Right to a Clean, Healthy and Sustainable Environment requesting to file an amicus brief in support of the case. (The Australian)
  
  

• Oil prices were up more than 2% on Friday after Ukrainian drones attacked the Russian port city of Novorossiysk. Ukraine has stepped up attacks on Russian energy infrastructure in response to Russian attacks on Ukrainian civilian areas. By some estimates, over half of Russia’s oil refineries have been hit more than once with between 15% and 38% of Russian refining capacity taken offline. (Reuters | The Economist)
  
  

• Switzerland and the US announced they have reached a deal to cut tariffs on Swiss imports to the US from 39% to 15%. This brings Swiss tariffs inline with the European Union. In return, Switzerland has agreed to invest $200 billion in the US over the next 3 years. (Al Jazeera)
  
  

• The leader of the world’s largest grocery retailer is retiring. Walmart CEO Doug McMillon announced he will be stepping down from the company he has led since 2014, with John Furner, who has led Walmart US since 2019, taking over the top job. (NY Times)
  
  

• Bitcoin fell well below US$100,000, and has almost given up all of its gains for 2025. At its peak in early October, the cryptocurrency was trading around US$125,000. In the past 6 weeks, it has fallen more than 20% to sit around US$95,000. (Yahoo Finance)

What the…?

Michael Burry, the investor famous for betting against the US housing market prior to the 2008 housing collapse, is closing down his hedge fund. This announcement came after he warned of out-of-control market valuations and disclosed bets against Palantir and Nvidia earlier this month.

In a letter that was later circulated on social media, Burry shared that his “estimation of value in securities is not now, and has not been for some time, in sync with the markets”. And, on Twitter (X), he left followers with this cryptic message:

Investing is a lifelong journey

Here’s what you can learn today

The risk of ETF overlap

Community Question: I’ve got ETFs and IVV and VGS, am I doubling up on those? Should I just keep one?

Isabella put this question to Simon and Alec on a recent episode of the Equity Mates Investing Podcast.

Exchange-traded funds, or ETFs, are an excellent source of simple, low-cost diversification. However, ETF overlap is when you own a number of ETFs, but the holdings of the various ETFs are the same, meaning you are not getting as much diversification as you may think.

A classic example would be if you own an ASX 200 ETF and an Australian banks ETF. Despite having different names and themes, both of them are heavily concentrated on Australia's big four banks because the big four banks also make up four of the top six largest companies on the ASX 200.

Don’t stress! ETF overlap is very common. It’s not always a problem, but it’s something that investors should be aware of within their portfolio.

Coming back to Isabella’s question, there is some serious ETF overlap between IVV and VGS. IVV is an S&P 500 ETF, tracking the largest 500 American companies. VGS tracks large international companies in developed countries excluding Australia.

The top three holdings in IVV and VGS are Nvidia, Apple, and Microsoft:

As shown in the table, those big tech names dominate both of the ETFs, so the overlap is really high. If you were to invest $1,000 in each of IVV and VGS, a little over 18% of your investment would be in those three stocks.

Back to Isabella’s big question: Is ETF overlap a problem?

As always, that depends on you and your risk tolerance. If you are looking for heavier exposure to the performance of big tech, Australian banks, or whatever other sectors you like, you may be happy to be have a little ETF overlap.

The problems arise around diversification, or more specifically around perceived diversification. If you are looking for diversification by investing in multiple ETFs, you need to check for ETF overlap to make sure your investment is actually diversified.

With the dominance of big tech in the US, some international and index ETFs may not be providing the level of diversification that everyday investors think they are. Next time you’re checking your portfolio, take a look through your ETFs and their holdings to make sure you’re achieving the your ideal level of diversification.

Want to watch the full episode? Check it out on the Equity Mates Investing YouTube channel or listen in here.

A message from Pimco

The PIMCO Short Term Active Yield Active ETF (ticker: EARN) is tailored to meet the needs of a diversified Australian portfolio. Designed to deliver monthly distributions and aiming to outperform cash and term deposits, EARN is managed with the same disciplined approach as PIMCO’s institutional client mandates while offering the flexibility, transparency and daily liquidity of an ETF. 

Investors should obtain a copy of the Product Disclosure Statement (PDS) relating to the product and consider the PDS before making any decision about whether to acquire an interest in any PIMCO fund mentioned in this publication. PIMCO Australia Pty Ltd ABN 54 084 280 508, AFSL 246 862 has determined the target market for this product which is set out in the target market determination (TMD) published on our website. The current PDS and TMD can be obtained via www.pimco.com/au/ 

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