<prompt> Human: Buffetts logic is that someone who invests in a SP 500 index fund, by definition, will match the markets performance.On the other hand, active investors as a group will also deliver average investment performance over time -- that is, some managers investments will do well, and others wont. However, when you add in the cost of actively managed investment options, particularly hedge funds, the result is that the average hedge fund will underperform the market.From the results of his bet, which competed against five funds-of-funds that represented hundreds of individual hedge funds, it appears his logic was sound. In fact, Buffett estimates that 60 of all the fund-of-funds gains went toward management fees.Buffetts main point is that when managers charge high fees, the managers may earn tremendous profits -- but investors wont. Therefore, the best investment most people can make, whether theyre wealthy or just have a few hundred dollars to invest, is a low-cost index fund such as the one Buffett used for his bet.  <response>: You may find these links helpful:- How to handle - Investing wiki pageI am a bot, and this action was performed automatically. Please contact the moderators of this subredditmessagecompose?torpersonalfinance if you have any questions or concerns. 