For the past few years, Warren Buffett has made an $1 mil. open bet to any takers that an S&P index fund could beat their selection of 10 hedge funds of their choosing, over a ten year period. What’s the catch? The hedge funds returns have to be discounted by the management fees, which Warren believes are the extreme downside of investing with hedge funds. Who took Warren Buffett up on this bet? Protégé Partners LLC, a firm that invests its customers’ money in funds of hedge funds. Read the article in Businessweek online and make sure to read the position statements. Classic Buffett:
A number of smart people are involved in running hedge funds. But to a great extent their efforts are self-neutralizing, and their IQ will not overcome the costs they impose on investors.
