It looks like Warren Buffett is winning his 'million dollar bet' against hedge funds

Warren buffettREUTERS/Jo Yong-HakWarren Buffett.

Shocker — Warren Buffett is winning a million dollar bet he made about investing 7 years ago.

Back in 2008, Warren Buffett bet that the S&P 500 would beat sophisticated hedge funds over the next 10 years as the economy recovered.

Carol J. Loomis at Fortune reports that Buffett’s chosen Vanguard’s 500 index fund is up 63.5 per cent, compared with a hedge fund index made by Protégé Partner’s, the managers he made the bet with.

Protégé’s index is up an estimated 19.6 per cent.

Though Buffett’s index fund has beaten Protégé’s selection the past six years, last year was a particularly bad one for hedge funds. Citi recently forecast a 30 per cent decline in hedge fund profits due to poor performance in 2014. And a hedge fund benchmark from Preqin, a research company, registered its lowest return in three years.

Whoever wins the bet will donate $US1 million to their charity of choice. (Each side actually put about $US320,000 into a zero-coupon Treasury bond, which, by 2018, will be worth roughly $US1 million.)

Check back in three years to see who winds up in the money.

And read the full Fortune story here >>

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