Warren Buffett lost a little ground in the eighth year of his $1 million 10-year wager that an inexpensive plain stock index fund will outperform high-fee hedge funds.

But, as Fortune's Carol Loomis reports in her annual update, Buffett still has a big lead.

His horse in the race, the Vanguard 500 Index Fund Admiral Shares, which tracks the benchmark , is up 65.7 percent. That's well ahead of the 21.9 percent average gain for the unnamed five funds of hedge funds chosen by Protege Partners, a New York City money management firm.

Buffett's lead was trimmed a bit over last year. The hedge funds were up 1.7 percent, edging out the index fund's 1.4 percent gain. It's only the second year that he's lost ground.

With just two years to go, it will be difficult for the hedge funds to make up their lost ground. But Loomis points out that hedge funds generally do better than index funds in a major market downturn, so they still have a chance if Wall Street goes south. That scenario, however, could be a "no-win victory" with the hedge funds just suffering a smaller loss than the overall market.

The winner's chosen charity will get at least $1 million when it's all over. A Buffett win will benefit Girls Inc. of Omaha. Protege is playing for Ark, formerly ARK (Absolute Returns for Kids), an international charity based in the U.K.