- Buffett has written against hedge funds' hefty fees and their promise of outperformance.
- During the bet from 2008 through 2017, the S&P 500 index fund Buffett picked gained 125.8%, versus 87.7% for the top-performing fund of funds that was part of the bet.
Warren Buffett's letter to shareholders released Saturday showed the final scorecard of his 10-year bet against hedge funds.
It's brutal — for the hedge funds.
Buffett entered the bet as a sort of protest against the hefty fees that hedge funds charge clients for the promise of outperformance. The fees — typically 2% of the investment's value and 20% of the profits — eat into clients returns, Buffett argued, and said returns do not typically justify those fees compared to the returns an investor could get from a low-cost S&P 500 index fund.
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The table below shows just that. The S&P 500 index fund gained 125.8% from 2008 through 2017, versus 87.7% for the top-performing fund of funds that was part of the bet.
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