Buffett's Portfolio with a Yield Twist: The VistaShares OMAH ETF's Income Play

The VistaShares Target 15 Berkshire Select Income ETF (OMAH) offers investors a novel approach to capitalizing on Warren Buffett's legendary stock-picking prowess while addressing a critical gap in Berkshire Hathaway's own equity: dividend income. By blending a portfolio mirroring Berkshire's top holdings with structured options strategies, OMAH aims to deliver a 15% annual income target—though at a cost. Here's why this ETF could be a compelling, albeit risky, play for income-seeking investors.

The Buffett Blueprint, With a Twist

OMAH's equity portfolio tracks the Solactive VistaShares Berkshire Select Index, which replicates the 20 largest holdings in Berkshire Hathaway's (BRK.B) public equity portfolio. As of June 2025, its top positions include Apple (10.16%), American Express (8.52%), Coca-Cola (6.06%), and Bank of America (5.38%), all stalwarts of Buffett's long-term strategy. This alignment offers investors exposure to a proven value-driven portfolio with an average holding period of over eight years.

But here's the twist: OMAH adds a structured income layer through options trading. The fund employs a mix of call and put options to generate monthly distributions, targeting a 1.25% payout (15% annualized). While this strategy aims to fill the income void left by Berkshire's lack of dividends—BRK.B hasn't paid a dividend since 1962—the mechanics of this income stream are far from guaranteed.

The Double-Edged Sword of Income Generation

The fund's options overlay is both its strength and its risk. By selling call options on its top holdings or buying protective puts, OMAH aims to create steady cash flows. For instance, selling a call option on Apple's stock could yield a premium if the stock doesn't reach the strike price by expiration. However, this strategy carries inherent risks:

• Return of Capital Concerns: As of June 2025, 100% of OMAH's distributions were classified as a return of investor capital—a red flag signaling the fund is dipping into principal to meet its income target. This could erode long-term value if earnings or capital gains don't materialize.
• Options Volatility: The fund's use of derivatives introduces sensitivity to market swings and time decay. A sudden surge in Apple's stock could force OMAH to buy back options at a loss, while a sharp decline in American Express could trigger put option payouts.

High Fees, High Concentration

The ETF's 0.95% expense ratio exceeds the category average of 0.91%, a cost that could eat into returns over time. Compounding this is its concentrated portfolio: the top five holdings alone account for nearly 38% of assets, with the top 10 comprising over 60%. This focus amplifies volatility risk—if Apple or American Express underperform, OMAH's NAV could suffer disproportionately.

Why Investors Might Still Bite

Despite these risks, OMAH offers a unique value proposition:
1. Berkshire's Playbook, Without the Berkshire: Investors gain indirect exposure to Buffett's picks without the dilution of Berkshire's conglomerate structure, which includes non-public holdings like insurance and railroads.
2. Monthly Income in a Dividend-Starved Market: With interest rates near historical lows and many stocks offering paltry yields, OMAH's 15% target—though aspirational—appeals to income hunters.
3. Short-Term Performance Momentum: Since its March 2025 launch, OMAH has met its monthly distribution target consistently, attracting $250 million in assets within four months.

Risks to Consider

• Distribution Sustainability: The return-of-capital distributions raise questions about whether OMAH can maintain its payout rate during market downturns.
• Liquidity in Derivatives: The ETF's options strategies may face liquidity challenges if specific contracts become hard to trade.
• Berkshire's Lagging Disclosures: The fund's holdings are based on Berkshire's quarterly 13F filings, which can lag by up to 45 days. This delay could leave OMAH exposed to shifts in Buffett's portfolio.

The Bottom Line: A High-Risk, High-Reward Bet

OMAH is not a core holding for conservative investors. Its high fees, concentrated bets, and uncertain income stream make it a niche play for those willing to accept volatility for the chance to ride Buffett's picks and tap into structured yields.

Investment Advice:
- Consider a Small Allocation: Use OMAH as a satellite position (5%-10% of a portfolio) to diversify equity income sources.
- Monitor Distribution Sources: Track whether future payouts shift from return of capital to return of earnings. A prolonged return-of-capital trend could signal trouble.
- Pair with Defensive Assets: Offset OMAH's equity risk with bonds or commodities to balance the portfolio's volatility profile.

In a market hungry for yield and nostalgia for Buffett's legacy, OMAH's blend of Berkshire's picks and options income offers a compelling—if imperfect—solution. Just remember: even Buffett's magic won't shield this ETF from the whims of the derivatives market.