We're in year 6 of Warren Buffett's million dollar bet against Hedgie Ted Seides. Buffett bet that the S&P 500 index would crush a portfolio of hedge funds hand picked by Seides.
So far, Buffett is correct. The index is stomping on the hedge funds.
Of course, there's no surprise here. If you are interested in long term capital appreciation a portfolio of indexed stocks will virtually always outperform a fund that is charging 2/20 and is run by people who think that they are smarter than the market.
What's amusing is that Seides is now coming up with excuses for why it's not a fair competition. You can read them here.
Thanks to my accounting colleague, Don for the link.