His argument was that those active investors, minus the fees they charge, won't beat the market over a long timeframe. I agree with him there as well. But that

His argument was that those active investors, minus the fees they charge, won't beat the market over a long timeframe. I agree with him there as well. But that argument completely ignores the point of the bet: obviously the average of all hedge funds will underperform after fees, almost everyone agrees with that based on simple arithmetic. The real question is whether funds made up of "quality" hedge funds (however that's determined) will outperform or not. ...which crucially depends on whether there's any good way to predict how hedge funds will perform. And that's something that I'm not really sure about - there are absolutely inefficiencies in the market (Buffett made his fortune off of the longer term inefficiencies, so I'm not sure why he's so adamant there are no such systematically exploitable short term ones), and I'm sure some hedge funds profit mightily off of them, but the reality is, too many hedge funds just play "follow the leader" with each other, using strategies that are very similar. These funds exist almost exclusively to collect management fees, not because the fund managers actually have a strategic edge worth pursuing, and for better or worse it's easier to get rich people to put money in a fund if it's similar to the funds that all their rich friends have their money in (niche funds that play unusual strategies tend to have massive trouble finding investors). So there's a huge middle ground of funds that are mostly following some segment of the market, minus fees - if you could figure out which ones are following each other, it might be possible to pick out the competently managed ones that actually have an edge, but I'm not sure. In any case, this bet is certainly not about average performance of hedge funds vs. average performance of the market, that's pretty much a settled question. Unfortunately there are no details on how this fund of funds is to be selected, so it's hard to comment further.