Hedge Funds Are Having Their Best Year Since 2013

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Hedge funds are headed for their best year since 2013 thanks to a gravity-defying stock market.

Improving performance may go some way to assuaging criticism for fees that are hard to justify with mediocre returns, even though on average the funds underperformed equity benchmarks including the S&P 500 Index, which is up 15.7 percent year-to-date.

2017’s winning strategies were deployed by equity funds skewed toward health care and technology, according to global data compiled by Chicago-based Hedge Fund Research Inc. through September. Over the same period, the S&P 500 Tech Index returned 26 percent, while the Bloomberg Barclays U.S. Aggregate Total Return Value Unhedged investment-grade bond fund returned 3.1 percent.

Funds that take short positions suffered the steepest losses, according to HFR. Macro-trading funds betting on broad economic trends, beset by outflows this year, also posted sub-par returns.

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