Buffett’s Apple (AAPL) purchase is often called one of his greatest bets ever. It checked every box of his investing philosophy while delivering extraordinary absolute returns. Berkshire started buying in Q1 2016 when Apple traded at around $25 (split adjusted). The investment alone accounts for over 40% of Berkshire’s entire stock portfolio at times.
But even Buffett isn’t immune to portfolio management realities. Beginning in late 2023, Berkshire started trimming its Apple stake for tax and concentration reasons, though Apple remains its largest single holding.
Return Comparison
If you had bought Apple stock on 12/31/2015 and liquidated on 6/30/2025:
- Annualized return: 25.47%
- Total return: 762.68%
If instead you had bought the Vanguard Information Technology ETF (VGT):
- Annualized return: 22.20%
- Total return: 571.38%
On paper, Apple crushed the ETF. But investing is not just about gross returns—it’s about after-tax returns.
Diversification offered by sector ETF’s
Holding a diversified sector ETF also means you don’t have to worry about company-specific risks:
- Will Apple keep pace in AI?
- Will Siri ever catch up to competitors?
- Will regulation hit margins?
Those risks get smoothed out across the broader technology sector. Even Buffett himself—arguably Apple’s biggest champion—has been forced to trim for diversification reasons.
The Tax Drag on Individual Stocks
The challenge with owning a single stock is that you often need to sell at some point—for rebalancing and risk management. Every sale in a taxable account creates a capital gains tax event.
Looking at returns from an after tax perspective for AAPL compared to the before tax returns of VGT, (not an apples to apples comparison), which returns are superior?
- At a 23.8% rate (20% long-term cap gains + 3.8% NIIT), Apple’s after-tax annualized return falls from 25.47% to 19.41%.
- At a 33.8% rate (adding high state income taxes), the after-tax return falls further to 16.86%.
The Takeaway
Apple was a once-in-a-generation investment, and Buffett’s timing was exceptional. But for most investors, even a brilliantly placed single-stock bet can lose its edge once taxes and rebalancing needs enter the picture.
Sector ETFs like VGT may not always deliver the highest headline return, but they can deliver a better after-tax experience—and that’s the return that ultimately compounds into wealth.