Hedge funds edged up in February to add to their January gains.
The average hedge fund rose 0.15% last month, according to the Lyxor Hedge Fund Index, and is up 1.73% on the year. By contrast, the Standard & Poor's 500 Index rose 1.4% in February and is up more than 6% on the year.
Returns were decidedly mixed across strategies, with eight of the 14 tracked by Lyxor posting gains. Fixed-income arbitrage had the best February, rising 2.06%, followed by equity-market neutral, up 1.65% on the month and 6.81% on the year, and variable bias, up 1.59% last month. Merger arbitrage funds were up 0.73% in February, while long/short credit arbitrage was flat.
Commodity trading advisers lost the most ground last month, falling 1.22%. Special situations lost 1.06%, global macro 0.74%, distressed securities 0.37% and short-term 0.15%. Convertible arbitrage funds were down slightly.
"The unexpected outcome of the Italian elections has hit many hedge fund managers this month, but a full-blow financial crisis is definitely not on their agenda," Stefan Keller, head of managed account platform research at Lyxor Asset Management, said.