Hedge funds outpace rivals in December

Hedge funds advanced in December, while all other market indices suffered, according to data from two hedge fund industry research and consulting firms. The Hedge Fund Research Inc. Fund Weighted Composite Index advanced 0.68% in December and gained 10.4% in 2007. The increase was led by strong returns in the Energy, Emerging Markets and Macro indicies, which gained 1.95% and 1.75%, respectively, according to Chicago-based HFR. "Hedge funds continued to do well due in a strong opportunity for hedge fund investing in emerging markets, greater exposure to commodities and government fixed income," said Ken Heinz, president of HFR. The Dow Jones Industrial Average, Nasdaq Composite Index and Standard & Poor's 500 Index fell in December by 0.8%, 0.3% and 0.9%, respectively. Meanwhile, hedge funds have minimized their exposure to aggregate equities and credit, said Mr. Heinz. The Real Estate and Financial industry led the decliners, falling 2.41% and 1.62%, respectively, during the month, as financial firms took write-downs to account for exposure to bad bets on subprime mortgages, Mr. Heinz said. In another report, The Hennessee Hedge Fund Index, which is compiled by Hennessee Group LLC of New York, increased 0.3% in December and advanced 11.6% for the year.