The “massive fees” charged by active fund managers — who often promise to outperform the broader market — can leave savers worse off than if they had simply used a low-cost index fund that tracks a stock-market index, Buffett warned.

To illustrate his argument, the “Oracle of Omaha” laid out the results of a challenge he presented to fund managers more than a decade ago. In 2005, he bet $500,000 that no investment professional could find five hedge funds that would match the performance of an index fund tracking the Standard & Poor’s 500-stock index over the long run. Only one fund manager stepped up to the plate: Ted Seides, a co-manager of the investment firm Protégé Partners.

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Over the first nine years of the challenge, the five hedge funds chosen by Seides delivered an average 2.2. percent a year. The S&P 500 funds picked by Buffett returned an average 7.1 percent a year. “That means $1 million invested in those [hedge] funds would have gained $220,000. The index fund would meanwhile have gained $854,000,” Buffett wrote.

While some of the funds chosen by Seides showed fewer losses than the S&P 500 index fund in some years or gained more than the index in other years, the index fund outshone them all over the long run:

Buffett cites “human behavior” as a reason investors continue to choose costly funds. Some people associate bigger price tags with higher quality, he said, adding that the same isn’t always true when it comes to investing. Many investors, college endowments and pension funds would be better off using the simpler investment products, he wrote, noting that even a 1 percent fee can add up over time.

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Last year, the Labor Department finalized the so-called fiduciary rule. The regulation would make it more difficult for some brokers to recommend pricey or complicated investment products and would require brokers working with retirement savers to put their client’s interests ahead of their own. In some cases, that could require brokers who are choosing between two similar funds to recommend the less-expensive option.

Earlier this month President Trump signed a memo asking officials to reevaluate the fiduciary rule and determine if it is harmful to investors, a move that supporters of the regulation fear is an effort to weaken or eliminate the rule altogether.

In the letter, Buffett also praised famed investor John “Jack” Bogle, the founder of Vanguard Group and a pioneer in the index fund universe. “In his early years, Jack was frequently mocked by the investment-management industry,” Buffett wrote. “Today, however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their savings than they otherwise would have earned.”