Buffett Watch

Hedge funds' 'obscene' fees make people rich — just not investors, says Buffett

Buffett: '2 and 20' hedge fund charges 'border on obscene'
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Buffett: '2 and 20' hedge fund charges 'border on obscene'

The "2 and 20" fee system that hedge funds use to charge their clients is overpriced and "borders on obscene," billionaire investor Warren Buffett, chairman and CEO of Berkshire Hathaway, said Monday.

"Two and 20 is going to make a lot of people rich, and it's going to make very few investors rich," Buffett told CNBC, calling the charges "ridiculous."

Buffett made the statement in reference to the fee structure normally charged by hedge fund managers, whereby they take 2 percent of a client's assets and 20 percent of the client's total returns.

"You don't get better because you charge a lot. That does not make you a better judge of securities or anything like that," the legendary investor said.

Buffett spoke to CNBC's "Squawk Box" at length Monday morning.

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