For those familiar with Berkshire Hathaway's (NYSE:BRK-A) (NYSE:BRK-B) Warren Buffett, it probably doesn't come as a shock that he's not keen on the idea of modern hedge funds and funds of hedge funds. In fact, if we flip back to Buffett's 2006 letter to Berkshire shareholders, we can read an amusing story that illustrates why investors are best off avoiding high-fee money managers like the plague.

Now Buffett is putting his money where his mouth is. Fortune's Carol Loomis recently revealed a wager that Buffett has set up with funds of hedge funds manager Protege Partners that pits the S&P 500 index against funds of hedge funds. The bet, which is being managed by Long Bets, reads: "Over a 10-year period commencing on January 1, 2008, and ending on December 31, 2017, the S&P 500 will outperform a portfolio of funds of hedge funds, when performance is measured on a basis net of fees, costs and expenses."

Because both parties are wealthier than most mere mortals -- or basically everyone, in Buffett's case -- the million-dollar stake will go to a charity of the winner's choosing.

The idealistic might like to think that the results of the bet, should they go Buffett's way, would put a limp in the speedy stride of the hedge fund industry and hamper its growth. According to BarclayHedge, as of the first quarter of this year, there was $2.1 trillion invested in hedge funds and another $1.2 trillion in funds of hedge funds. And both have exhibited almost absurd growth over the past five years.

Players in The Motley Fool's CAPS community certainly don't seem to have the highest regard for the hedge fund industry and have rated the two most obvious public market plays, Fortress Investment Group (NYSE:FIG) and Och-Ziff (NYSE:OZM), one and two stars, respectively, out of a possible five. Even larger diversified financial companies like Goldman Sachs (NYSE:GS) and Blackstone (NYSE:BX) that also manage hedge funds haven't been able to create much more of a fan base. CAPS players also seem to have a healthy bit of skepticism toward the returns that hedge funds offer their investors. One CAPS All-Star, TMFMattyA, gave Och-Ziff a thumbs-down late last year, saying:

I'll have to refer to Barron's on this one: In regards to [Och-Ziff], "few in the history of the asset-management industry have gotten so rich while generating such mediocre performance." And look at this: OZ Master Fund ([Och-Ziff]'s flagship hedge fund) has returned 13.9 percent over the past 5 years, compared to the S&P 500's return of 15.5 percent. And these guys actually get away with charging 2 percent management fees, while taking 20 percent of the profits. Like the hedge funds it manages, this company should underperform.

Even a big win for Buffett could be spitting into the wind. Bright and prominent figures have been railing against management fees for an awful long time. Not least among them is Jack Bogle, who founded the Vanguard empire on the idea that index funds with low management fees were the absolute best investment choice. Despite having simple arithmetic and logic on their side, these luminaries have had little luck slowing Wall Street's constant "innovation" when it comes to finding new ways to generate fees from investor money.

Of course, savvy individual investors don't have to wait 10 years to see how right Buffett is -- OK, so I'm obviously biased. They can easily tap his past writings, as well as those of others like Bogle, today and start cutting down on the fee money that is leeching returns from their portfolios.

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