One of the most famous investors in the world is Warren Buffett.
The Oracle of Omaha has earned this reputation by delivering incredible returns over multiple decades.
Between 1965 and 2021, the market value of Buffett's Berkshire Hathaway has increased by an average of 20.1% per annum. This means that Berkshire Hathaway has returned a massive 3,641,613% over the 56 years.
To put that into context, a single investment of just 27.5 cents would have turned into $1 million.
Investing in moats
One of the key reasons for Buffett's success could be down to his focus on buying companies with wide economic moats.
In his 2007 letter, he explained why moats are important for investments:
A truly great business must have an enduring 'moat' that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business 'castle' that is earning high returns.
Therefore a formidable barrier such as a company's being the low-cost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with 'roman candles', companies whose moats proved illusory and were soon crossed.
But which ASX shares have moats?
There are a number of defensive ASX shares with moats that I think would be great long-term options for investors.
These include lottery operator Lottery Corporation Ltd (ASX: TLC), toll road company Transurban Group (ASX: TCL), realestate.com.au owner REA Group Limited (ASX: REA), and biotech giant CSL Limited (ASX: CSL).
But investors don't necessarily need to pick individual ASX shares to buy. That's because of the VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT).
This exchange-traded fund (ETF) has been designed to replicate Warren Buffett's investment style. It gives investors access to a diversified portfolio of companies with sustainable competitive advantages and fair valuations.
Over the last 10 years, the index that the fund tracks has generated a return of 18.1% per annum. This would have turned a $10,000 investment into more than $50,000 today.
All in all, I believe this demonstrates why following Warren Buffett's advice could help you grow your wealth with ASX shares over the long term.
