Hedge funds hit hard in January

January was a brutal month for hedge funds, according to the latest performance figures out today from Hennessee Group LLC in New York. The 2.4% decline by the Hennessee Hedge Fund Index in January was less than the major U.S. stock indexes fell over the same period but still marked a bad month for hedge funds, according to E. Lee Hennessee, managing principal. “The Hennessee Hedge Fund Index had its fourth worst month in history behind August 1998 (Russian default), April 2000 (bursting of the tech stock bubble), and July 2002 (WorldComm default),” she said. The Standard & Poor’s 500 stock index declined 6.2% in January, while the Nasdaq Composite Index fell 9.9%. Of the 23 subcategories making up the hedge fund index, only three generated gains in January. The short-biased category gained 5.4%, macro funds were up 1.4%, and convertible arbitrage funds were up 0.6%. The worst performing category was the telecom and media index, down 5.1%, followed by a 4.3% January decline by the Asia-Pacific index subcategory.