Short-Biased Hedge Funds Rise in February

Pessimists were once again winners in the hedge fund sector last month, according to data released Friday, with short funds gaining more than 3% as the industry contracted and the broad markets posted double-digit declines.

Hedge Fund Research, which tracks industry data, said its composite hedge-fund index dropped 0.5% in February, though short-biased funds rose 3.2%. So far this year, hedge funds that bet against equities have added 6.1%.

The trend is unsurprising as major benchmarks have hit lows not seen in over a decade. The Dow Jones Industrial Average declined over 11% in February, and slumped further this month, falling below 6500 at one point Friday. ...