Saturday, 1 August 2015
Last updated 1 day ago
Jan 25 2013 | 1:18pm ET
Hedge funds may have lost more than some pride when they were trounced by the Standard & Poor's 500 Index last year. They may have lost their battle of the titans with Berkshire Hathaway's Warren Buffett.
The Oracle of Omaha made a 10-year bet five years ago, that money invested in an S&P index fund would outperform a fund of hedge funds. And at halftime, Buffett (and the S&P) is up by more than a touchdown.
Buffett's index fund is up 8.69% over the past five years. A suite of five funds of funds selected for the battle royale by Protégé Partners is up just 0.13% over the period.
Buffett benefitted handsomely from a nearly 16% surge by the S&P last year, the second year in a row that the index bested the average hedge fund. Protégé's fund of funds of funds, by contrast, rose only 6.46% during the year, in line with the average hedge fund's performance for 2012.
Of course, there's a long way to go. In the bet's first year, 2008, Buffett's Vanguard Admiral shares lost 37% against Protégé's 24% drop. Still, the results—the first time either side has been in the black—earned a "gulp" from Protégé's Ted Seides. It's also the first time that Buffett's been ahead as the S&P climbed out of a deeper hole than the hedge funds.
May 27 2015 | 2:15pm ET
Support Hedge Funds Care, also known as Help For Children (HFC), by participating in this year's raffle. All proceeds go to support HFC's mission of preventing and treating child abuse. Read more…