Hedge funds are recovering rapidly in 2009, Morningstar reported in their preliminary hedge fund performance study for the third quarter of 2009 and asset flows through August 2009.
"Paced by an exceptionally strong September, hedge funds began to regain their swagger in the third quarter," said Nadia Papagiannis, Morningstar alternative investments strategist. "The road to recovery for hedge funds was paved by strong performance in riskier asset classes such as emerging markets, distressed, and small-cap securities."
But hedge funds overall haven't yet returned to their October 2007 peaks, the Morningstar 1000 Hedge Fund Index declined 25.2% through February 2009, and has only recovered 20% in the last seven months, with 11.4% to go.
Certain hedge fund strategies have set new highs, however. In September, hedge funds following global macro-economic strategies, fully recovered from 2008 losses, despite lagging the performance of other category indexes this year.
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