The big selling point for hedge funds is that they act differently from the stock markets, and supposedly provide hedging to equity investors. But while stocks were tumbling in January, hedge funds also suffered their biggest monthly loss since May 2012, with returns down by 2.6 percent, according to Preqin, an alternatives data provider.
Hedge funds pursuing equity strategies fell by 4.3 percent in January. That's not much different from the S&P 500, which lost 5.1 percent on the month.
The smaller hedge funds showed the best performance, relatively speaking. Funds managing less than $100 million lost 2.5 percent; funds in the $500 million to $999 million range fell by 3.1 percent, and those with assets of $1 billion or more were down by 2.9 percent.