Hedge Funds Fell 1.31% in August, Most in 15 Months

Date: Monday, September 10, 2007
Author: Katherine Burton, Bloomberg

Sept. 10 (Bloomberg) -- Hedge Funds fell 1.31 percent on average in August, the worst monthly performance since May 2006, led by declines in emerging-markets and macro funds.

Emerging-markets funds dropped 2.5 percent, and macro funds decreased 2 percent, Chicago-based Hedge Fund Research Inc. said in a statement today. High-yield bond funds fell 1.97 percent. Hedge funds last declined as much in May 2006, by 1.56 percent.

``Hedge fund performance volatility increased at the end of July and has persisted into September,'' said Kenneth Heinz, president of Hedge Fund Research, in the statement.

The U.S. benchmark Standard & Poor's 500 Index returned 1.5 percent in August.

Hedge fund assets climbed by $16.8 billion to a record $1.76 trillion in July.

A few strategies made money in August. Funds that invest in companies that are merging returned 0.3 percent, and multistrategy funds were up 0.03 percent. Short-sale funds, which bet on shares that managers expect to fall, rose 1.29 percent.

To contact the reporter on this story: Katherine Burton in New York at kburton@bloomberg.net