HFN: Hedge Funds Fell 15% In ‘08

Jan 14 2009 | 1:56pm ET

Hedge funds ended a dreadful year on a somewhat positive note, with the average fund returning 1.11%, according to HedgeFund.net.

HFN’s Hedge Fund Aggregate Average’s 2008 decline of 15.27%—“the worst year for hedge fund performance in history,” according to HFN—actually amounts to relatively good news, as most indices have shown hedge funds losing closer to 20% last year.

According to HFN, poor performance in the fourth quarter was exacerbated by the looming wave of year-end redemptions. December’s rise may be an indication that the worst of investor withdrawals are over, the data provider said.

Most strategies tracked by HFN enjoyed a positive December, but just three finished last year in the black. Short-bias funds were the strongest performers in a year in which the Standard & Poor’s 500 Index fell 37%, returning 32.45%. Mortgage hedge funds added 3.54% last month to boost its year-to-date return to 23.9%, while CTA/managed futures funds rose 12.21% in 2008.

The biggest losers were, no surprise, long-only funds, which fell 41.08% last year. Emerging markets funds were not far behind, down 39.44%, with energy funds on average losing 37.28%. Distressed funds fell 26.9% on the year, convertible arbitrage funds 24.16%, event-driven funds 20.59% and long/short equity funds 20.24%.

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Editor's Note