Hedge funds badly trailed the broader markets in January, eking out a small return as the stock market rally continued into the new year.
Hedge Fund Research's HFRI Fund Weighted Composite Index opened 2011 with a 0.29% return last month. Event-driven funds set the pace, returning an average of 1.96% in January—private issue and Regulation D funds did particularly well, rising an average of 5.41% on the month.
Relative value funds added 1.04% on the month. Asset-backed funds rose an average of 2.1%, corporate fixed-income funds 1.93%, multi-strategy relative-value funds 1.57% and convertible arbitrage funds 1.5%.
Equity hedge funds did somewhat less well, returning an average of 0.71%. Technology and healthcare specialists did best, returning 1.47%, with short-bias funds their mirror image, dropping 1.47% in January.
Macro funds and emerging markets funds has a tough January, with some exceptions. The former dropped 0.63% on the month and the latter 0.02%, but Russia and Eastern Europe funds soared 3.66%.
Funds of hedge funds edged down 0.27%.