The Oracle of Omaha once again has proven that Wall Street’s pricey investments are often a lousy deal.

Warren Buffett made a $1 million bet at end of 2007 with hedge fund manager Ted Seides of Protégé Partners. Buffett wagered that a low-cost S&P 500 index fund would perform better than a group of Protégé’s hedge funds.

Buffett’s index investment bet is so far ahead that Seides concedes the match, although it doesn’t officially end until Dec. 31.

The problem for Seides is his five funds through the middle of this year have been only able to gain 2.2 percent a year since 2008, compared with more than 7 percent a year for the S&P 500 — a huge difference.

That means Seides’ $1 million hedge fund investments have only earned $220,000 in the same period that Buffett’s low-fee investment gained $854,000.

“For all intents and purposes, the game is over. I lost,” Seides wrote. The $1 million will go to a Buffett charity, Girls Inc. of Omaha.

A sports gaming firm says it makes sense for Seides to pay up now. “Our oddsmakers believe there is a 96.8 percent chance that Buffett will win.

In turn, they are giving Protégé Partners about a 3 percent chance to win at this point,” according to Jacob Crossman, a spokesman for Diamond Sportsbook International, which has tracked the bet.

In conceding defeat, Seides said the high investor fees charged by hedge funds was a critical factor.

Hedge funds tend to be a good deal for the people who run the funds, who pass on big bills to the investors.

“Is running a hedge fund profitable? Yes. Hedge fund managers typically demand management fees of 2 percent of assets under management,” according to Capital Management Services Group (CMSG), which tracks the hedge fund industry. “Performance fees for managers can be 20 percent to 50 percent of trading profits,” CMSG adds.

By contrast, the costs of an average index fund are minimal. A fund that tracks the S&P 500 fund might have an expense ratio of as little as 0.02 percent.

Indeed, Seides, in a sentiment that sounds as though he is now using the Buffett playbook, wrote that “the higher the price an investor pays for an asset, the less he should expect to earn.”