Warren Buffett Hedge Funds

Warren Buffett's Bet Over Funds of Hedge Funds

Warren Buffett has long been a critic of hedge funds, especially funds of hedge funds with their extra layer of fees. A while ago, a New York money management firm, Protege Partners, made a bet with Buffett that the cumulate returns of five fund of funds would beat the S&P 500 index, even after fees.

At the Berkshire Hathaway annual investor meeting today, Warren Buffett updated a wager he made several years ago with a hedge fund, among the Oracle of Omaha’s least favorite animals in the financial zoo. The hedge fund managers are leading the wager, but the gap is narrowing significantly.

Tired of hedgie bashing from Buffett, a New York money-management firm called Protégé Partners bet Buffett that in 10 years, the cumulate returns of five “funds of funds” picked by Protégé, even after including fees, would outperform the S&P 500 index.

Buffett long has complained about the fees charged by hedge fund managers, and in 2006 he lobbed the bet. Protégé Partners took the challenge. At stake is $1 million, to go to the charity designated by the winner — Girls Inc. for Buffett and Absolute Return for Kids for the hedge fund firm. Source

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