Hedge funds on seven-month win streak, says HFR

Hedge funds produced positive returns for the seventh consecutive month in September, with the HFRI Fund Weighted Composite index gaining 3.02% for the month, according to data from Hedge Fund Research. The HFRI Fund of Funds Composite index returned 1.64% in September. Returns of both indexes in September are in sharp contrast to returns in September 2008, when the HFRI Fund Weighted Composite index dropped 6.13% and the HFRI Fund of Funds Composite index sunk 6.54%, according to HFR's Sept. 30 performance report. The HFRI Fund Weighted Composite index returned 17.21% for the nine months ended Sept. 30 and the HFRI Fund of Funds Composite index was up 9.75% for the same period, according to HFR data. If hedge fund and funds-of-funds performance remains strong in the fourth quarter, both indexes likely will easily beat their record negative performance for the 12 months ended Dec. 31, 2008, when the HFRI Fund Weighted Composite index returned -19.03% and the HFRI Fund of Funds Composite index, -21.37%. Hedge funds specializing in distressed, activist, asset-backed and convertibles “all benefited from credit spread tightening and appreciation in (residential and commercial mortgage-backed) securities … ahead of the government-funded (Public-Private Investment Program),” HFR analysts noted in a news release.