Average Year-to-Date Hedge Fund Return: -0.9

By Ben Steverman | November 2, 2011
  • What's Happening

    What Happened

    Hedge funds have dipped with world markets in recent months. The Bloomberg aggregate hedge-fund index dropped 3.2 percent in September and has fallen 0.88 percent so far this year. Despite such weak performance, investor dollars continue to flow into hedge funds. According to an Oct. 5 report from TrimTabs Investment Research, $52.2 billion flowed into the hedge fund industry in the first eight months of 2011.

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  • Why It Matters

    Why It Matters

    With economic and financial uncertainty buffeting world markets, certain types of hedge funds, such as "global macro" funds, are becoming especially popular, says TrimTabs research analyst Leon Mirochnik. Investors "think hedge funds are good at riding out that storm," he says. Stocks have lagged hedge funds this year, with the MCSI World equity index dropping 8.7 percent through Oct. 13.

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  • What It Means for Your Portfolio

    What It Means for Your Portfolio

    Hedge funds help diversify portfolios by providing returns that aren't correlated with other investments, says Thom Melcher, managing executive of Hawthorn, a unit of PNC Wealth Management that serves "ultra-affluent" families. Picking the right hedge fund for a client can take six months, he says. The goal is not to find funds that take big risks for huge returns, but rather funds with "relatively steady returns with a relatively predictable risk," he says.

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