Soaring Equities Boost Hedge Funds In Sept.

Oct 12 2010 | 1:37pm ET

A key industry index confirms that hedge funds enjoyed their best month of the year in September, with nine of 10 strategy indices enjoying gains on the month.

The Dow Jones Credit Suisse Hedge Fund Index added 3.23% last month, according to early estimates. While that's just a fraction of the 8.9% jump by the Standard & Poor's 500 Index, the average hedge fund is still ahead of the broader market at 5.78% on the year.

Given the equity market rally in September—the S&P 500's best month since the Great Depression—its no surprise to see stock-heavy strategies doing best last month. Emerging markets hedge funds rose an average of 4.68% (7.63% year-to-date), followed by long/short equity funds (4.5%, 2.53% YTD) and equity market neutral funds (4.3%, down 0.34% YTD). It's also no surprise to see that the month's only loser would be short-bias hedge funds—and they did not disappoint, plummeting 11.77% on the month (down 12.97% YTD).

Event-driven multi-strategy funds were up 4.14% on the month (6.9% YTD). Risk arbitrage funds added an average of 3.88% (5.73% YTD), event-driven funds 3.31% (6.42% YTD) and multi-strategy funds 2.83% (5.04% YTD).

Managed futures funds returned 2.76% in September (6.41% YTD), global macro funds 2.63% (9.21% YTD), distressed funds 2.12% (5.64% YTD), fixed-income arbitrage funds 1.48% (9.69% YTD) and convertible arbitrage funds 1.32% (7.75% YTD).

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