A little nitpicking but it's not ANY hedge fund, as I can name quite a few off the top of my head that have done much better than the S&P during that time period.
For a little more nitpicking, how many of those would you have chosen 8 years ago at the start of the bet?
Here are some excerpts from an article by Ted Seides, founder of Protégé Partners, the other party in the bet:
http://www.businessinsider.com/fund-manager-explains-his-losing-bet-2015-2The bet is against 5 hedge funds, each of which is a fund of funds.
“Fund of Funds” is the composite return of the five hedge fund of funds selected by Protégé Partners, LLC (“Protégé”) for the Bet.
He explains how if the factors that caused Protégé to be losing the bet so badly are factored out, it is actually a tie:
We believe the headwinds faced by hedge funds have resulted from a combination of the substantial outperformance of the S&P 500 over global equity markets and the adverse impact of the Fed’s Zero Interest Rate Policy (ZIRP) on hedge funds relative to other investment vehicles. Together, these factors wreaked havoc on a bet, the prospects of which we initially felt quite confident about. As we intend to show, the residual performance after adjusting for the impact of this investment environment manifests a return stream that could have been beneficial to a diversified portfolio of risk assets under different circumstances.
and
After adjusting for the market environment, hedge funds had a positive residual return amounting to slightly more than the amount of fees they received. With all the hullaballoo created by lovers and haters of the investment vehicle, we appear to have a tie.
He also explains that in the future, hedge funds are likely to be more successful:
In summary, the upcoming environment will likely be more conducive to hedge fund success than it has been
I want that guy investing my money!