Hennessee: Hedge Funds Up 1.95% In Oct.

Nov 8 2010 | 11:23am ET

Hedge funds posted their second-straight winning month in October, according to the Hennessee Group.

The Hennessee Hedge Fund Index rose 1.95% last month as all but one of the firm's strategy indices gained ground for the second month in a row. The index is up 6.75% on the year.

Private investments in public equities and private financing funds led the way in October, rising 3.71% on the month (7.61% year-to-date). Financial equities and international funds also enjoyed strong returns, adding 3.48% (5.51% YTD) and 3.37% (9.24% YTD), respectively.

"The financial markets continued to rally as the companies reported solid earnings and the Fed announced an additional round of quantitative easing.  Hedge funds posted strong positive performance, but lagged traditional benchmarks due to conservative exposure levels and losses from hedges,” Hennessee co-founder Charles Gradante said. “Arbitrage, event-driven and credit strategies continue to drive gains, outperforming long/short equity strategies for the month and year-to-date."

All three of Hennessee's major hedge fund strategy meta-indices posted big gains on the month, led by global macro funds at 2.4% (6.87% YTD). Arbitrage and event-driven funds were up 1.97% (9.33% YTD) and long/short equity funds 1.72% (5.36% YTD).

Despite the strong gains, only PIPE funds bested the Standard & Poor's 500 Index—and just barely—with the broader market index adding 3.69% on the month. The hedge fund index is still beating U.S. stocks, with the S&P500 up 6.11% on the year.

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