In his annual letter to Berkshire Hathaway shareholders, legendary investor Warren Buffett joked that his stint as a paperboy during adolescence was his “one brief flirtation with honest labor.”

Altogether, the Oracle of Omaha estimates that he heaved about 500,000 newspapers at the front porches of subscribers along his route. And he still has sufficient muscle memory from those days to challenge Berkshire shareholders to an annual newspaper-tossing challenge.

Most investors probably have a better chance of beating Buffett at this challenge than beating him on the investment front. Since 1965, Buffett’s investment vehicle, Berkshire Hathaway, has generated an annual return of 20.8%, or roughly double the performance of the S&P 500.

In his latest missive, Buffett also provided an update on the bet he made nine years ago with Protégé Partners, which manages funds that invest in hedge funds.

Buffett wagered $1 million that a simple index fund that tracks the S&P 500—specifically, the Vanguard 500 Index Fund (VFINX)—would beat a collection of hedge funds selected by Protégé. Nine years into the bet, the index fund has built a considerable lead, with a total return of 85% versus 22% for the hedge-fund portfolio.

Buffett will probably win this bet, and it will support his long-running crusade against high investment management fees and their destructive effect on returns. The key point is that, on average, fund managers do not beat their benchmarks after fees, not because they are necessarily bad at what they do, but simply because they charge fees that are too high to make it a profitable venture for investors.

Private-equity funds and hedge funds are notorious for charging the highest fees—the standard 2 and 20, or a 2% annual fee on assets under management plus 20% of profits. Mutual funds never reached these extremes, but many still charge high fees relative to their performance.

Let’s look at how fees eat into returns over the long term. The accompanying graph compares the performances of a mutual fund that charges a 1.1% annual fee, a low-cost exchange traded fund (ETF), and a flat-fee investment newsletter advisory service. Note that our expected-return assumptions for all three groups are the same, but the fee assumptions are different and reflect current market averages.

Unsurprisingly, the newsletter advisory service comes out on top because its fee does not increase as an investor’s assets grow. With more of their own money working for them, investment newsletter subscribers can achieve a superior compounding effect over time.

With a starting value of $1 million, the investment newsletter subscriber’s portfolio grows to $2.5 million over a 10-year period, beating the mutual fund by about 10%, or $227,000.

Although the low fees levied by ETFs and other passively managed index funds give investors a performance edge, even their modest fees erode returns when compared to a flat-fee investment newsletter.

One final point regarding Buffett’s investment philosophy. Mainly for tax reasons, he prefers that companies reinvest surplus capital rather than pay it out in the form of dividends. But on this score, research has shown that dividend payers outperform non-dividend payers over the long term.

While few investors will ever match Buffett’s performance, a simple strategy that focuses on investing in dividend-paying stocks at a low cost will go a long way toward creating enduring wealth. With low fees and high-quality stocks, such a portfolio will beat the broad market and most investment managers over time.