Most US hedge funds lost out in Oct

Hedge fund

Hedge funds fell 0.5 percent on average in October, the industry's first loss in five months, hedge fund tracking data published on Wednesday showed.

Funds lost money last month as the S&P 500 sank 2 percent.

Still, the benchmark S&P 500 Index had risen as much as 16.55 percent this year as of Sept. 14, when it reached its 2012 closing high of 1,465.77.

Hedge funds have gained only 4.3 percent on average this year, according to Cambridge, Massachusetts-based Hedge Fund Research.

Positive performance among hedge fund managers that use Relative Value Arbitrage, Equity Hedge and Event Driven strategies did not offset the losses suffered by macro-focused hedge funds, HFR data showed.

Fixed Income Asset Backed hedge funds remain the best performers in 2012, HFR said, rising 14.4 percent for the year through Oct. 31.

Managers focused on stocks also managed to add to their gains last month, even as the broader stock market sold off. Equity hedge funds rose 0.2 percent in October, with gains across long, short and market neutral exposures, HFR said. Those managers have returned almost 5.7 percent this year.

But macro-focused managers lost 2.2 percent last month and are now down about 1.3 percent for the year.

Hedge fund performance in October reflected a definitive shift in investor sentiment from the beta-driven optimism over steady improvements in stagnant global economies to the realities, risk and uncertainly inherent in additional European banking stabilization measures, U.S. elections and the pending fiscal cliff, said Kenneth Heinz, president of HFR.

David Einhorn's Greenlight Capital lost 1.5 percent last month, but it is still up 11.3 percent for the year, according to a person familiar with the numbers.

While hedge funds, in general, battled to make gains in October, some continued to record solid performance in the month.

Jason Mudrick's Mudrick Distressed Opportunity Fund, one of the year's best performers, gained 0.7 percent in October. The fund is up 18.8 percent for the year.

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