Warren Buffett bets against hedge funds  JUN 10 2008

Buffett to hedge fund managers: your customers would do better investing in a no-load index fund. To prove his point, Buffett has bet $1 million to that effect on Long Bets.

Costs skyrocket when large annual fees, large performance fees, and active trading costs are all added to the active investor's equation. Funds of hedge funds accentuate this cost problem because their fees are superimposed on the large fees charged by the hedge funds in which the funds of funds are invested.

A number of smart people are involved in running hedge funds. But to a great extent their efforts are self-neutralizing, and their IQ will not overcome the costs they impose on investors. Investors, on average and over time, will do better with a low-cost index fund than with a group of funds of funds.

Read more posts on kottke.org about:
investing   money   warrenbuffett

this is kottke.org

   Front page
   About + contact
   Site archives

You can follow kottke.org on Twitter, Facebook, Tumblr, Feedly, or RSS.

Ad from The Deck

We Work Remotely

 

Enginehosting

Hosting provided EngineHosting