Hedge Funds

Hedge Funds Lose Money, Not as Much as Feared


The average U.S. hedge fund lost money in August, the first time this year that these loosely regulated portfolios were in the red, according to data released Monday.

Hedge funds slipped 0.7 percent on average in August after returning 0.33 percent in July, said New York-based Hennessee Group, which invests in these portfolios and monitors their performance.

But the losses for the industry as a whole were not as steep as many investors had feared late last month after some prominent funds reported double-digit declines.

Indeed, August's losses barely affected hedge funds' performance for the year. Through August, the average fund was up 8.3 percent, while it had gained 8.9 percent through July.

Hedge funds, which often promise to make money in all markets, underperformed the broader stock indices, however. The Standard & Poor's 500 index gained 1.3 percent, and the Dow Jones Industrial Average advanced 1.1 percent.

Among hedge funds, so-called quant funds, which rely largely on computers to make trading decisions, suffered especially heavy losses halfway through August.

But many funds were able to pare losses in the last days of August, which allowed the group to suffer only a small downturn.

Hennessee Group and others, including Hedge Fund Research, will release more detailed performance data in coming days.