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Hedge funds inch higher in January after dismal \'08

Date: Monday, February 9, 2009
Author: Reuters.com

Hedge funds started the year with tiny gains and handily outperformed a declining stock market in January after suffering the industry's worst-ever losses in 2008, data released on Friday show.

According to Hedge Fund Research, the average hedge fund inched up 0.39 percent last month. At the same time the average U.S. stock mutual fund lost 4.67 percent while the average international large-cap core fund tumbled 9.01 percent, according to data from research firm from Lipper Inc.

The news comes only weeks after the roughly $1 trillion industry reported a 19 percent loss for 2008, marking its worst-ever returns. Investors pulled $155 billion out of hedge funds last year.

Funds specializing in fixed income convertible arbitrage strategies gained 5.85 percent and funds specializing in energy and basic materials rose 3.08 percent, HFR data showed.

While the broader stock market kept sliding lower during the month, many hedge fund managers fared better because they were able to find some winners unlike last year when nearly all stocks headed lower. (Reporting by Svea Herbst-Bayliss; Editing by Tim Dobbyn)