Warren Buffett is losing his "big bet" against a collection of hedge funds, but it's still early in the game.

Buffett and Protégé Partners LLC of New York City started a 10-year wager last year.

With a Treasury bond that will be worth $1 million at stake, Buffett has put real money behind his contention that an S&P 500 index fund will outperform five funds-of-hedge-funds over a decade, after all fees and expenses.  (The money goes to the winner's favorite charity.)

Buffett is represented by Vanguard 500 Index Fund Admiral Shares (VFIAX).  Protégé chose the five funds-of-funds.  (Buffett knows the names of the five funds, but they are not being publicly revealed.)

Now, Fortune's Carol Loomis writes, the results for 2008 are in (it took awhile for all the funds to submit audited financial statements) .. and .. the hedge funds "soundly whipped" the index.

They fell, on average and net of all expenses and fees, only 23.9 percent.  That's not great, but its still much better than the Vanguard index fund's 37 percent plunge, even with the index fund's much smaller fees and expenses.

Loomis notes, "Considering that hedge funds can and do sell short, and that they are not limited to investing in stocks, Protégé's victory in a bear market year like 2008 was not surprising to anyone involved in the bet."

But it's still a long time until December 31, 2017 .. and this year the S&P is doing much better than last year, up almost 23 percent.

Buffett tells Loomis: "I just hope that Aesop was right when he envisioned the tortoise overtaking the hare."

Current Berkshire stock prices:

Class A:

BRK.A loading...

Quote  |  Chart  |  News  |  Profile

[BRK.A  Loading...      ()   ]

Class B:

BRK.B loading...

Quote  |  Chart  |  News  |  Profile

[BRK.B  Loading...      ()   ]

Email comments to