Hedge Funds End Wretched Year With Uptick

The hedge fund industry closed out a miserable year on a positive note, posting a slight gain in December, according to data from two research groups.

Hedge Fund Research's composite index showed a 0.4% return for the industry, while Hennessee Group reported a 0.5% gain last month. But while the upside performance may be an indication that hedge funds are turning a corner, both groups also noted that 2008 was the worst year on record for the industry. Hedge Fund Research reported a full-year loss of 18.3% for hedge funds, while Hennessee calculated a 19.2% decline.

Hedge funds have long been touted as a way for high-net-worth individuals to reap mega returns, often with risky or new-fangled investment strategies. That view has taken repeated blows in recent months as funds posted negative returns through the crisis of 2008, and clients demanded their cash back. ...