Hedge Funds in the Red in September

Hennessee said hedge funds were down 1.30% for the month. That compares to the S&P 500 Index, which saw a 10.87% loss, a 12.37% loss for the Dow Jones Industrial Average and a 10.86 loss for the Nasdaq stock market. For the prior month’s performance, see August Hedge Funds Up by a Hair .

On a year-to-date basis, hedge funds showed a 5.52% loss, Hennessee said. That compares to losses of 28.23% for the S&P, 24.24% for the DJIA, and 39.90 for Nasdaq.

According to Hennessee, in the current environment of falling equity prices and market volatility, short-biased hedge funds led the pack with a 4.59% gain in September and a 17.91% return year to date.

Convertible arbitrage managers were second in line with a 1.33% return or 3.59% year to date, followed by regulation D managers who showed a 0.68% return or a 2.83% loss year to date.

At the other end of the return spectrum was Latin America, which Hennessee said went from the strongest August performer to the weakest in September with an 11.96% drop or 22.82% so far this year. Healthcare/biotech was the second worst performer with a 4.54 loss or a 19.53% loss year to date.

Latin America’s problems were mainly due to the pending Brazilian Presidential election. Also, many in Argentina estimated the GDP contraction to be 12% to 15% in the second quarter, Hennessee said.

Although Hennessee said the short-biased managers could well profit from the continuing stock slump, the company said Healthcare/biotech and value managers have been reluctant to go short, which has dampened their performance.