Tags: Buffett | wager | Protege | fund

Buffett Leads Money Manager Protege in 10-Year Market Wager

By    |   Friday, 07 February 2014 06:55 AM

Berkshire Hathaway CEO Warren Buffett leads New York money manager Protege Partners six years into their 10-year, $1.27 million financial market bet.

Buffett wagered that Vanguard 500 Admiral fund, which tracks the Standard & Poor's 500 Index, would beat the average returns of five hedge funds of funds chosen by Protege, Fortune reports.

The Vanguard fund rose 43.8 percent in the six years ended Dec. 31, compared with an estimated 12.5 percent for the five Protege funds, according to the magazine.

Editor’s Note:
Retire 10 Years Earlier With These 4 Stocks

The Vanguard fund generated a total return of 32.3 percent last year, while Protege's funds returned 11.8 percent.

The winner of the bet chooses which charity will receive the money at the end of the 10 years.

To make the $1 million total for the bet, each side contributed $320,000, and the money was invested in zero-coupon bonds, Fortune reports. But, thanks to the low interest rate environment, the bonds were almost worth $1 million by the end of 2012.

At that point both sides agreed to put the money into Berkshire Hathaway stock, which soared 32.7 percent in 2013, lifting the value to $1.27 million at year-end, according to Fortune.

Meanwhile, Buffett announced last month Berkshire Hathaway will insure a Quicken Loans contest in which anyone who can guess the winner of every NCAA men's basketball tournament game wins a $1 billion.

"The more I think about it, the more I'd say it's pretty clever for both companies," Dominique Hanssens, a marketing professor at UCLA, tells the Los Angeles Times. "One billion dollars has shock value, and shock value is what the media is after."

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

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Berkshire Hathaway CEO Warren Buffett leads New York money manager Protege Partners six years into their 10-year, $1.27 million financial market bet.
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2014-55-07
Friday, 07 February 2014 06:55 AM
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