Warren Buffett’s decade-long wager demonstrated the S&P 500’s superior returns compared to hedge funds, reinforcing his long-term endorsement of index funds.
Warren Buffett won a $500,000 bet in 2017 after the S&P 500 outperformed a group of hedge funds over a 10-year period. The wager, made in 2007, pitted Buffett’s low-cost index fund investment against hedge funds selected by Ted Seides of Protégé Partners.
The S&P 500 delivered consistent returns, while the hedge funds underperformed, leading to Buffett’s landslide victory. The proceeds were donated to charity. Buffett has since reiterated that most investors should hold S&P 500 index funds as a core portfolio component.
The Vanguard S&P 500 ETF (VOO), with an expense ratio of 0.03%, charges just $0.30 per $1,000 invested, making it a cost-effective option for passive investors.