And regarding Jack:Here are the results for the first nine years of the bet – figures leaving no doubt that Girls Inc. of Omaha,
the charitable beneficiary I designated to get any bet winnings I earned, will be the organization eagerly opening
the mail next January.
...Under my agreement with Protégé Partners, the names of these funds-of-funds have never
been publicly disclosed. I, however, see their annual audits.
The compounded annual increase to date for the index fund is 7.1%, which is a return that could easily
prove typical for the stock market over time. That’s an important fact: A particularly weak nine years for the
market over the lifetime of this bet would have probably helped the relative performance of the hedge funds,
because many hold large “short” positions. Conversely, nine years of exceptionally high returns from stocks
would have provided a tailwind for index funds.
Instead we operated in what I would call a “neutral” environment. In it, the five funds-of-funds
delivered, through 2016, an average of only 2.2%, compounded annually. That means $1 million invested in
those funds would have gained $220,000. The index fund would meanwhile have gained $854,000.
If a statue is ever erected to honor the person who has done the most for American investors, the handsdown
choice should be Jack Bogle. For decades, Jack has urged investors to invest in ultra-low-cost index funds.
In his crusade, he amassed only a tiny percentage of the wealth that has typically flowed to managers who have
promised their investors large rewards while delivering them nothing – or, as in our bet, less than nothing – of
In his early years, Jack was frequently mocked by the investment-management industry. Today,
however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their
savings than they otherwise would have earned. He is a hero to them and to me.