Hedge Fund Industry Shrinks by 9%

Hedge Fund Industry Shrinks

Hedge Fund Industry Shrinks by 9%

Hedge funds worldwide shrank by 9 percent to $1.56 trillion last month, the lowest level in two years, after investors withdrew cash and stock markets declined.

Investors pulled $40 billion from hedge funds in October, according to Chicago-based Hedge Fund Research Inc., while market losses cut industry values by $115 billion. Investors withdrew $22 billion from funds of funds, which pool money to invest in hedge funds.

Hedge funds fell by an average 6 percent last month, pushing the year-to-date decline through October to 16 percent, according to the HFRI Fund Weighted Composite Index, which HFRI first published in 1990. In the same periods, the hedge-fund index outperformed the S&P 500 Stock Index, which decreased 17 percent last month, and 34 percent this year through October.

Funds run by Jeffrey Gendell and John Burbank III posted their worst monthly losses in October. Peter Thiel gave back gains made earlier in the year. Nobel-prize winner Myron Scholes froze his biggest fund. Read more...

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