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Optima chief defends hedge funds of funds

Dixon Boardman, CEO and Founder of Optima Fund Management with USD3 billion under management comments on the famous Warren Buffett bet with Protégé Partners.

Boardman writes that Buffett won the bet, but lost the argument.

“We are great admirers of Warren Buffett. He is undoubtedly one of the greatest investors, having chalked up a remarkable record with Berkshire Hathaway.
However, we take exception to his disparagement of hedge funds in his recent annual letter to shareholders. He famously made a bet with Protégé Partners, the fund of funds group, that a passive investment in the S&P 500 Index would outperform a group of funds of funds selected by Protégé. Nine years have passed since the inception of this wager, and although it still has some time before it is fully concluded, the financial press ‐ and Buffet ‐ have declared victory for the S&P 500.
“Nine years is a long time, but what about OTHER nine year periods? In the nine‐year period preceding the Buffett/Protégé bet, Optima’s long/short equity multi‐manager strategy significantly outperformed the S&P 500. In fact, over the two nine‐year periods combined – 18 years in total, more than enough to cover full market cycles – Optima outperformed.
The evidence is clear: funds of funds that are made up of carefully selected hedge funds that are run by savvy and experienced managers can ‐ and have ‐ added value over time."

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