I am a great fan of Warren Buffet's investment style and how he has made so many investors rich through his financial intelligence and entrepreneurship.

I am also a great fan of Index fund. So when I heard about Buffet throwing a challenge to active investors if they can beat a low cost index fund in a long run (10 years) after expenses and fees I couldn't stop reading about that.

Buffet argues that passive investors who put money into a broader market get returns average of the market. Active investors on the other hand try to use their financial intelligence to pick stocks & funds so that they can beat the average return of the market. Active investors more or less will approximate index fund's return. But the high cost and fees will bring their net return below the average market return.

Portege Partners LLC from New York has taken up the challenge to prove that actively managed hedge funds will do better than the average market return. Their main argument lies in the flexibility of investing long and short. Their goal is to make money no matter where the market is heading. Actively managed funds in the universe of S&P 500 might trail the average return but that concept doesn't apply to hedge fund because it's a completely different specie.

Each side as put $320,000. The total fund of $640,000 has been used to buy zero coupon Treasury bond that will be worth $1 million by the time the bet will be concluded.

Well, we can only know who wins at the end of the bet which is Dec 31, 2017. But investing in the total market is a time tested and proven technique of investing with the best risk/reward ratio. Several economist including Ben have suggested that the best way to invest is to invest in the entire market.

No matter what's your investment styles you will never be wrong in a long run adopting the strategy of dollar cost averaging (small regular investment) in a low cost index fund like Vanguard 500 Index Fund (VFINX).

Remember that costs and fees from an actively managed funds will eat up a lot from your net return. And always know that your investment adviser might be trying to sell you something despite high cost & fee just because he/she will get his/her cut from the sale.

Always ask your adviser for the low cost investment alternatives and compare it against what Vanguard and T. Row Price have to offer.