While a new ETF, VistaShares Target 15 Berkshire Select Income ETF (OMAH), promises 15% annual income by mimicking Berkshire Hathaway’s portfolio with a covered call overlay, its nearly 1% expense ratio and capped upside significantly erode long-term returns. Investors are urged to consider directly owning Berkshire Hathaway (BRK.B) for zero management fees or a low-cost S&P 500 ETF like VOO for broader exposure, avoiding OMAH’s hidden costs and limitations.
For decades, legendary investor Warren Buffett has championed the simple truth that high costs are the archenemy of compounding wealth. Yet, a new exchange-traded fund, OMAH, attempts to package his investment philosophy with a covered call strategy, imposing a hefty nearly 1% annual fee for the privilege. This isn't just one of the more expensive tributes to the Oracle of Omaha; it’s a silent drain on investor capital, eroding returns before a single trade is even made.
The VistaShares Target 15 Berkshire Select Income ETF (NYSEARCA:OMAH) markets itself with an enticing 15% annual income target, generated by selling call options against a U.S. equity basket that mirrors the Solactive VistaShares Berkshire Select Index. While positioned as "Buffett-plus-income," the fund's underlying mechanics are both pricier and more restrictive than its marketing suggests.
The True Cost of a 0.98% Expense Ratio
OMAH’s net expense ratio stands at a significant 0.98%. For an investment of $10,000, this translates to $98 annually that is siphoned from the fund’s Net Asset Value (NAV). In stark contrast, directly owning shares of Berkshire Hathaway (NYSE:BRK.B) incurs no such ongoing expense ratio. Investors typically pay a one-time, often zero, commission and become direct owners of a piece of Buffett’s empire.
The insidious nature of a 0.98% annual fee is its long-term impact: it can reduce your total ending balance by roughly 9% over a decade and nearly 18% over two decades, irrespective of market performance. Opting for direct ownership of BRK.B completely sidesteps this substantial and recurring drag on returns.
The Unadvertised Cap on Upside
The 15% income target that OMAH touts is derived from its strategy of selling call options against its underlying stock basket. This approach, while generating income, inherently caps the upside potential of the portfolio's holdings. Should a stock within the basket surge past the sold call option’s strike price, OMAH shareholders do not fully participate in that appreciation. For instance, the fund’s April 30, 2026 holdings revealed short calls on components like BRKB C472.5, AAPL C277.5, GOOGL C355, and MA C510. Any dollar these stocks climb above these levels is a dollar less in potential profit for OMAH investors.
Furthermore, the nature of OMAH’s distributions warrants close examination. While it pays monthly—most recently $0.23263 per share on July 27, 2026, totaling $2.82227 over the trailing 12 months—a covered-call fund’s payouts don't always equate to earned income. Distributions can comprise ordinary income, capital gains, or even a return of capital. The latter reduces an investor's cost basis and defers taxes until the shares are sold, making the tax character crucial for evaluating the fund's headline yield. For those seeking monthly income, numerous more cost-effective options exist beyond such complex and expensive strategies.
Understanding OMAH’s Actual Portfolio
The "Berkshire ETF" moniker often leads investors to believe they are gaining significant direct exposure to Berkshire Hathaway. However, a mere 8.99% of OMAH’s net assets are invested directly in BRK.B. The majority is allocated across a diverse 96-stock portfolio, with Apple accounting for 9.97%, American Express 8.35%, Occidental Petroleum 5.84%, and Coca-Cola 5.03%. While these are indeed companies frequently associated with Berkshire’s equity holdings, investors can acquire these same blue-chip stocks directly, bypassing OMAH’s 0.98% expense ratio entirely.
Performance: Short-Term Appeal vs. Long-Term Reality
In the short term, OMAH’s strategy has shown some favor. Over the year ending August 21, 2026, OMAH posted a 10.36% gain, significantly outperforming BRK.B’s 1.48% rise. When distributions are factored in, OMAH’s total return for this limited period appears robust. However, this comparison often inverts over longer investment horizons. Berkshire Hathaway (BRK.B) boasts impressive long-term returns, up 73.81% over five years and a staggering 233.28% over ten years. OMAH, having only launched on January 1, 2025, lacks a comparable long-term track record to truly validate its strategy.
Superior and Cheaper Alternatives
The most straightforward and cost-effective alternative to OMAH is direct ownership of BRK.B itself. It carries a 0% expense ratio, has no ongoing distributions to complicate tax planning, and offers unconstrained upside potential, embodying the long-term compounding strategy Buffett advocates. While you forgo the 15% income target and OMAH’s diversified basket, you gain direct access to the very essence of what the ETF’s name implies. For investors seeking broader, Buffett-style large-cap exposure without the hefty fees, the Vanguard S&P 500 ETF (NYSEARCA:VOO) holds many of the same mega-cap companies at a fraction of OMAH’s cost, boasting a much lower expense ratio.
The Critical Question for Investors
OMAH’s strategy is transparent, but its trade-offs are often understated. Before committing capital, investors should ask a crucial question: Are you truly willing to pay 0.98% annually, plus accept capped upside potential, for an income stream that could be partially replicated more cheaply, all while sacrificing the powerful long-term compounding that built Warren Buffett’s legendary reputation?
