Hedge Funds Pass High Water-Mark, BarclayHedge Says

Oct 15 2010 | 1:01pm ET

Hedge funds have finally recovered from losses they suffered during the financial crisis, according to the Barclay Hedge Fund Index.

The average hedge fund’s 3.63% gain in September at long last returns the average industry player to its high-water mark, BarclayHedge’s Sol Waksman said.

“September’s gain puts the index into new high ground. The prior peak was established at the end of October 2007 when the index gained 2.87%.”

“It’s taken three years for hedge funds to recover from the financial meltdown and break their previous high,” he said.

The BarclayHedge index is now up 5.26% on the year, buoyed by positive returns in 17 of its 18 strategy indices and “propelled by a robust rally in global equities, a boom in mergers and declining credit spreads,” Waksman explained. Some 90% of the hedge funds reporting to the BarclayHedge index were up in September.

Healthcare and biotechnology funds led the way last month, adding 6.35%. Equity long-bias funds also did well, rising 5.86%. Emerging markets funds were up 4.98% and global macro funds 3.65%.

With the Standard & Poor’s 500 Index an Dow Jones Industrial Average posting their best Septembers since the Great Depression, it was a long month for short sellers, who lost an average of 6.45% on the month.

The Barclay Fund of Funds Index returned 2.11% last month. It is up 1.25% on the year.

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