Hedge Funds Add 1.44% In February

Mar 8 2011 | 12:44pm ET

Hedge funds posted gains in February but continued to dig themselves a big hole in their race to exceed the broader markets.

The average hedge fund rose an estimated 1.44% last month, the Dow Jones Credit Suisse Hedge Fund Index shows. In January, that benchmark added 0.69%, leaving it up 2.14% on the year.

Unfortunately for hedge funds, that means they aren't making the most of the market rally: The Standard & Poor's 500 Index rose 3.43% in February and is up 5.88% through the first two months of the year.

Convertible arbitrage funds enjoyed the strongest February, adding 3.29% (5.52% year-to-date). Managed futures funds rose 2.56% (1.72% YTD), event-driven multi-strategy funds 1.92% (3.69% YTD), long/short equity 1.73% (2% YTD), event-driven 1.59% (3.42% YTD), global macro 1.26% (0.48% YTD), multi-strategy 1.13% (3.13% YTD) and distressed 1.11% (3.03% YTD).

Risk arbitrage funds added 0.87% on the month (1.77% YTD), fixed-income arbitrage 0.85% (2.54% YTD) and equity market-neutral funds 0.49% (2.29% YTD).

Two strategies lost ground in February. Emerging markets funds shed 0.63% (down 1.01% YTD), while dedicated short-bias funds were mauled by the market bulls, dropping 3.84% (down 4.64% YTD).


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Editor's Note