Cold Snap: Hedge Funds Lose 0.71% In January

Feb 5 2010 | 3:53pm ET

Hedge funds’ hot streak came to an end amidst the January chill, according to Hedge Fund Research.

The HFRI Fund Weighted Composite Index dropped 0.71% last month. The index had soared 20.03% last year.

Most of the losses were suffered by equity hedge funds and macro funds, which dropped 0.85% and 2.16% on the month, respectively. Even last year’s darlings, emerging markets funds, suffered a tough month, dropping 1.24%.

By contrast, relative value funds posted an average return of 1.5% and event-driven funds an average return of 0.85%.

Some substrategies were able to battle through the cold with some impressive January gains. Mulit-strategy relative value funds jumped 2.36%, and corporate fixed-income relative value funds 2.23%. Distressed and restructuring funds added 2.01% on the month, and short-bias funds sought to put their awful 2009 behind them with a 1.68% rise.

Among emerging markets funds, only global funds were winners in January, rising 0.71%. All other regional HFRI indices lost ground, none more so than Latin America funds, which shed 3.67%.

Funds of hedge funds declined 0.7%.

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