Buffett Backs Pension Trustee’s Anti-Hedge Fund Stance

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%.


In Depth

Debunking Conventional Investment Wisdom

Feb 8 2017 | 3:22pm ET

Due diligence in the hedge fund world has long involved some combination of the...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

iCapital Network: The Trump Effect On Direct Lending

Feb 23 2017 | 4:21pm ET

The arrival of the Trump Administration has raised questions among private debt...

 

From the current issue of