Hedge funds pushed higher to just under $600 billion in spite of the difficult third quarter, according to data from Hedge Fund Research Inc., a 4.7% increase from the end of the second quarter and a 10.6% rise since the beginning of the year.
Josh Rosenberg, a managing director at the hedge fund tracking firm, said a more surprising figure is the fact an additional 274 hedge funds opened for business during the third quarter. Netted with the 39 funds that closed, the total number of hedge funds in the U.S. now stands at 5,135, a 5.3% net gain from the second quarter.
"Hedge funds have clearly demonstrated their strength as a wealth preserver during the recent periods of market decline and high volatility," said Joseph G. Nicholas, chairman and founder of Hedge Fund Research.
The CSFB/Tremont Hedge Fund Index said that the portfolios in its sample of the industry have risen 0.85% from the beginning of the year through Sept. 1.
Van Hedge Fund Advisors International Inc., which monitors the entire industry, said the average domestic hedge fund earned 0.9% net in October. Offshore hedge funds averaged a 0.5% net return, it said.
Hedge funds lagged the major stock indexes during October's market rally but continue to beat these benchmarks for the year. The Standard & Poor's 500 index rose 8.8% last month but is down 21.8% for the year. The average equity mutual fund was down 2.8% in October and 20.8% for the year.