Paul Thomas For The Daily Mail

Winner: Warren Buffet successfully bet a robot investor would beat a human  

Winner: Warren Buffet successfully bet a robot investor would beat a human  

The world’s most successful and well-known investor has won his long-held bet that a fund controlled by a robot would outperform a human expert fund manager over the course of a decade.

In 2007 Warren Buffett bet investment firm Protégé Partners $1 million (worth £505,000 at the time) that a fund designed to blindly follow the S&P 500 stock market index would beat a selection of funds managed by humans after a period of ten years.

He argued that the big fees charged by fund managers eat away at savers’ returns and that, consequently, most people would be better off putting their money in a cheap tracker fund instead.

Trackers are popular with investors — particularly younger investors — who want to keep down their costs.

However, if the stock market crashes, the value of your investments will plummet in value along with it, whereas a good manager will be able to react to limit your losses.

Experts say that Mr Buffett was helped in his bet by a decade of growth for world stock markets.

Over the past ten years, the S&P 500 returned an average of 7.1 per cent a year while the basket of funds chosen by Protégé returned just 2.2 per cent.

The $1 million has been donated to Girls Inc, a U.S. charity that works to empower and inspire young women and girls.

Ben Yearsley, of adviser Shore Financial Planning, says: ‘Trackers are a good choice if you want to keep your costs down — but you have to accept that the only way you can beat the stock market is to pick a good fund manager.’

p.thomas@dailymail.co.uk

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