In many ways, Buffett forecast a trend with his bet. Investing in indexes and exchange-traded funds has accelerated since the 2008 financial crisis. By comparison, poor performance by hedge funds as a group has led investors to pull money recently.

Hedge funds, on average, lost 0.6 percent this year through March 31, according to data compiled by Bloomberg. Last year, 979 funds closed, more than any year since 2009, and the industry saw outflows of $16.6 billion in the last two quarters, according to Hedge Fund Research.

Profit Gain

While Buffett ran hedge-fund-like partnerships in the 1950s and 1960s, he ultimately made Berkshire his investment vehicle and remains its largest shareholder. His acquisitions transformed the company into a conglomerate with dozens of subsidiaries and interests in manufacturing, retail, transportation and energy, primarily in the U.S. Berkshire Class B shares advanced 76 cents to $146.24 at 10:06 a.m. in New York, extending their gain for the year to 11 percent.

Buffett reiterated his view Saturday that businesses will do well in the U.S. in the coming decades. First-quarter profit at Berkshire climbed 8.2 percent to $5.59 billion on gains in the manufacturing segment and from investments, he told shareholders.

Still, some of the company’s largest units are facing challenges. The reinsurance business, long an engine of growth, has become less attractive amid increased competition and low bond yields. Earnings at Berkshire’s BNSF railroad were “down significantly” and will remain pressured because of slumping coal volumes, Buffett said. Insurance units were hurt by claims from hail storms.

Coke, Broccoli

Buffett and Vice Chairman Charles Munger acknowledged that two of Berkshire’s largest stock holdings, American Express Co. and International Business Machines Corp., are facing competitive threats. Buffett, 85, also defended Berkshire’s holding of Coca-Cola Co., despite obesity rates in the U.S.

“I have not seen evidence that convinces me that it’ll be more likely I reach 100 if I suddenly switched to water and broccoli,” he said. The remark sidestepped a request to discuss the effect of sugary drinks on global public health without touching on his own diet.

While Buffett highlighted Berkshire’s holding of Wells Fargo & Co., he said he would probably avoid investing in 45 out of the 50 largest banks, citing hidden risks tied to the use of derivatives.