Prediction:
"Over a ten-year period commencing on January 1, 2008, and ending on December 31, 2017, the S&P 500 will outperform a portfolio of funds of hedge funds — more than 200 of them — when performance is measured on a basis net of fees, costs and expenses," Buffett predicted.
He posted the above prediction on Long Bets, a website for making long-term wagers and nominating charities to receive the winnings. Ted Seides, co-manager of Protégé Partners — an asset manager that invests in multiple hedge funds — agreed to bet that a portfolio of five funds, invested in more than 200 hedge funds, would beat the S&P 500 index.
Outcome:
Buffett has argued for years that index funds offer better returns to investors than stock-pickers, as they provide exposure to a broad range of stocks and charge fewer fees.
The Sage of Omaha won the bet. The S&P 500 returned an average of 8.5% between 2008 and 2017, while the average return of the five funds it was up against was less than 3%.
Buffett donated his $2.2 million payout to Girls Incorporated of Omaha.