Hedge funds returned 1.85% in August, beating only the Nasdaq’s 1.54% returns. The Dow rose 3.54% in the month, followed by the S&P 500’s 3.36% increase, according to Hennessee Group.

Year-to-date, however, hedge funds are up 17.3%, beaten only by the Nasdaq’s 27.4% return. In the first eight months of the year, the Dow has risen 8.2% and the S&P 12.99%.

“There was good economic news released in August, specifically housing and manufacturing data,” Hennessee co-founded Charles Gradante told The Wall Street Journal. “However, our expectations for future growth and a V-shaped recovery are tempered. Government spending continues to drive demand, while the private sector has been largely absent. This dynamic is not sustainable.”

In addition, since September is traditionally a month when the markets pull back, Hennessee Group is remaining cautious in the near term.

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