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

Q&A: Star Mountain's Brett Hickey On Investing In 'The Growth Engine Of America'

Sep 22 2017 | 5:06pm ET

Lower middle-market companies form the economic fabric of the nation, but they can...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Don’t Overlook These 6 Hybrid Cloud Concerns

Sep 14 2017 | 6:27pm ET

Cloud-based technology solutions have made tremendous inroads into the alternative...