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Saturday, 10 December 2016
Last updated 23 hours ago
Jun 9 2014 | 10:44am ET
Warren Buffett’s index-fund investments have handily beaten hedge funds in his famed bet with Protégé Partners’ Ted Seides, and he doesn’t see why the same can’t be true for a California public pension fund.
The City & County of San Francisco’s Employees’ Retirement System’s chief investment officer wants to allocated 15% of its $20 billion to hedge funds. Board member Herb Meiberger disagrees, and has enlisted the backing of the Oracle of Omaha.
Meiberger went to Omaha last month for Berkshire Hathaway’s annual shareholder meeting, but wasn’t able to ask his question. Instead, he posed it to Buffett in a May 6 letter.
Buffett responded emphatically, telling Meiberger “I would not go with hedge funds.” Rather, Buffett suggested “index funds and net sell options.”
In 2007, Buffett bet Seides that a Standard & Poor’s 500 Index fund could beat a basket of hedge funds over a 10-year period. Six years in, he’s winning by a wide margin, with a 43.8% return against Seides’ 12.5%.