October Hedge Fund Index

October Hedge Fund Index

Hennessee Hedge Fund Index Falls 0.05% in October

The Hennessee Hedge Fund Index fell 0.05% in October, but remains up 20% year-to-date.  Hedge funds included in the index also outperformed the S&P and Nasdaq last month which fell by 2% and 3.6%, respectively.  Yet the Hedge Fund Index posted a worse performance than the Dow Jones Industrial Average's flat performance in October.
Hennessee cofounder Charles Gradante said that the markets' liquidity-driven rally showed signs of weakness after seven months of positive gains. "We need to see earnings growth for the rally to be sustainable," he said.
The fixed-income index had the biggest gain among the sectors tracked by Hennessee, posting a 4.2% rise. The health-care and biotech index saw the biggest decline, 3%, followed by the short-biased index and the financial equities index, which fell 2.8% and 2.5% respectively.
Cofounder Lee Hennessee said a dichotomy exists between "funds that are defensively positioned, anticipating a market correction, and those that want to participate in a potential fourth-quarter rally."
Hedge funds have been rebounding from their worst-ever year in 2008. Funds on average lost about 20% last year, though that was far less than the decline for major stock averages.  Source

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