Hedge funds dipped 0.5% in October but bested the S&P 500’s 2% drop and Nasdaq’s 3.6%, Hennessee Group said.

Hennessee co-founder Charles Gradante said the market has risen over the past seven months primarily due to money moving back into the market and that “we need to see earnings growth for the rally to be sustainable.”

Lee Hennessee, the firm’s other co-founder, said managers are mixed as to the next direction of the market, split between those “that are defensively positioned, anticipating a market correction, and those that want to participate in a potential fourth-quarter rally.”

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.