Hedge fund managers had a tough month in March, lagging behind equity and bond benchmarks but outperforming equity markets, according to firms who monitor their performance.

The Hennessee Hedge Fund Index was down 1.9% in March and down 3.5% in 2008. The Standard & Poor’s 500 index dropped 0.6% and was down 10% overall for the first quarter. The Nasdaq Composite Index and Lehman Aggregate Bond Index saw a gain of 0.3%, while the Dow Jones Industrial Average remained relatively unchanged.

Funds run by Appaloosa Investment LP, Maverick Capital Ltd., Moore Capital Management and Tudor Investment Corp. all lost more than 3% in March, according to HSBC’s private bank database.

Other hedge funds, like Bridgewater’s Pure Alpha fund (which gained 3%) and David Einhorn’s Greenlight Capital (which rose 1.7%) managed to generate gains in March.

Despite a low first quarter, hedge fund indexes have still outperformed equity markets.

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