Bill Gates might be one of the most successful investors alive, but his portfolio looks very different from what most financial experts recommend. While many investors strive for diversification to manage risk, Gates — through the Gates Foundation Trust — is heavily concentrated in just a few companies. And for him, that strategy seems to work.
For the average investor, though, copying Gates' playbook could be a risky move.
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Gates' Portfolio Is Focused — Very Focused
Roughly 79% of the Gates Foundation Trust's $48 billion portfolio is invested in just four stocks, according to recent filings analyzed by The Motley Fool.
1. Microsoft (NASDAQ:MSFT) – Gates' longtime company remains the cornerstone of his holdings with about 27% of the portfolio sitting here. The trust owns over 26 million shares, worth about $13 billion.
2. Berkshire Hathaway (NYSE:BRK) (NYSE:BRK) – Gates and Warren Buffett's friendship and shared philanthropy extend to their portfolios. Roughly 25% of Gate's portfolio rests in this stock. Berkshire's diverse business mix and strong cash flow make it a stable long-term holding.
3. Waste Management (NYSE:WM) – A steady performer in an unglamorous industry, Waste Management provides reliable income and growth, boosted by sustainable waste-to-energy projects. Gates has 15% of the foundation's portfolio invested here.
4. Canadian National Railway (NYSE:CNI) – The trust's stake in this North American rail giant adds an industrial backbone to the portfolio, with consistent dividends and a wide economic moat. Roughly 12% of the portfolio is invested here.
In short, the Gates Foundation relies on large, stable companies with proven track records — and dividends that help fund billions in annual charitable giving.
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Why Gates Can Afford to Skip Diversification
For an investor like Gates, concentration isn't recklessness — it's strategy. His foundation's holdings reflect confidence in a few durable businesses, not a need for short-term growth. These are companies with wide moats, dependable cash flow, and leadership positions in their industries.
More importantly, Gates' financial position gives him a unique safety net. With a net worth of over $100 billion, his wealth and resources can withstand volatility that would devastate an average investor's portfolio. If one or two of his major holdings faltered, it wouldn't threaten his ability to meet financial goals — or the foundation's mission.
Why Most Investors Should Diversify Instead
For everyone else, concentration like this could spell trouble. Financial experts and academic research agree that diversifying across sectors and asset classes helps reduce what's called "unsystematic risk" — the risk tied to individual companies or industries.
A well-diversified portfolio typically includes a variety concentrated across several more stocks than Gates focuses on. Experts recommend at least 10 to 30 stocks spread across different sectors.
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"If you had 30 stocks and they all happen to be in one specific sector, you'd still be way less diversified than if you had only 10 stocks but they were across a bunch of sectors," Nick Fazio, associate wealth advisor at Regent Peak Wealth Advisors, told Bankrate. "You want to make sure that in the effort to diversify, you are picking stocks that shouldn't generally be trading alongside each other."
Many investors achieve even broader diversification through exchange-traded funds and mutual funds, which offer exposure to hundreds of companies with a single purchase. ETFs or S&P 500 index funds are popular ways to mirror the market's overall performance — without needing to bet big on a handful of companies.
The Bottom Line
Gates' investing strategy works because of who he is — and what he can afford to risk. His concentrated bets are backed by billions in assets and decades of experience. That's not to say the four big companies can't work in your own portfolio, but for everyday investors, diversification remains the safer path to long-term growth and financial stability.
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