Photo: The Daily Ticker
Here’s the deal: Back in 2008 Buffett made a bet against hedge funders Ted Seides and Jeffrey Tarrant of Protege Partners LLC. He wagered that funds that invest in hedge funds for their clients could not beat the stock market over 10 years.Obviously, we won’t know how this bet will really turn out for another 6 years, but so far, Warren Buffett is winning, says Bloomberg.
Seides and Tarrant built an index of five funds that invest in hedge funds to compete against a Vanguard mutual fund that tracks the Standard & Poor’s 500 Index. The loser has to donate $1 million to the winner’s charity of choice on December 31, 2017.
The Vanguard fund’s low-cost Admiral shares returned 2.2 per cent, with dividends reinvested, from the start of the bet through Feb. 29, as stocks rebounded from a 12-year low in March 2009. The hedge funds fell about 4.5 per cent, based on Protége’s index returns for the first three years and results since then for the Dow Jones Credit Suisse Hedge Fund Index, which has roughly tracked the group of unidentified funds when adjustments are made for extra fees.
Neither party is talking about the bet, as they’re gentlemen, but we’ll be watching.