Thursday, February 6, 2014

Buffett widens lead in $1 million hedge fund bet

FORTUNE -- Results are in for the sixth year of the competition sometimes called the $1 million bet, and Warren Buffett -- once a piteous straggler in this 10-year wager on stock market performance -- has opened up a sizable lead over his opponent, New York asset manager Protégé Partners. Buffett's horse in the bet is a low-cost S&P index fund, and Protégé's is the averaged returns to investors (after all fees) of five hedge funds of funds that the firm carefully picked for the contest. 
At the end of 2013, Vanguard's Admiral shares -- the S&P index fund that's carrying Buffett's colors -- were up for the six years that began Jan. 1, 2008 by 43.8%. For the same period, Protégé's five funds of funds, on the average, gained only by an estimated 12.5% (a figure minutely uncertain because some of the funds lack final figures for 2013). 
By the terms of the bet, the names of those five funds of funds have never been publicly disclosed (though Buffett knows their identity). It has always been assumed that one of the five is a hedge fund of funds run by Protégé itself.