Hedge Funds Rally To Start Off New Year

Feb 9 2009 | 1:14am ET

Hedge funds didn’t waste any time turning things around after their worst year in history. A pair of indices from Hedge Fund Research show something that hasn’t been seen for many months: A positive year-to-date return.

Hedge funds added 1.1% in January, according to the HFRX Global Hedge Fund Index, and 0.39%, according to the HFRI Fund Weighted Composite Index. And the indices show another pleasant development, with the overwhelming majority of strategies in the black.

Some of last year’s worst-performing strategies posted big gains in January. Convertible arbitrage funds, which lost more than half their value last year according to the HFRX indices, rose 5.9%, according to both indices. Relative value funds, which lost 37.6% in 2008, rose 2.33% last month. Energy and basic materials funds jumped 3.08% in January after losing 38.5% last year.

Not all of last year’s laggards turned things around in January. Emerging markets funds, which lost 36.97% last year, fell a further 1.72% last month. And the worst-performing emerging region, Russia and Eastern Europe, lost 4.17% after dropping 57.63% in 2008.


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