Hedge funds post steep declines

Hedge fund managers who concentrate on picking stocks lost an average of 4.1% in January, the biggest monthly decline in more than seven years, as global equity markets tumbled, a report shows.

It was the worst month for stock hedge funds since a 4.3% decline in November 2000, when the collapse of technology shares was in full swing, according to a report issued Friday by Chicago-based Hedge Fund Research, which tracks fund returns.

But stock hedge funds still outperformed the Standard & Poor’s 500 index, which fell 6.1% in January, as well as the MSCI World index of developed-economy stocks, which tumbled 7.7% in January.

Hedge funds of all types lost an average of 1.8% last month.

Macroeconomic funds, which make bets on the direction of interest rates, currencies and commodity prices, gained 1.7%. Average returns for relative-value arbitrage funds, which try to take advantage of price differences among stocks, bonds and other securities, were near zero. Emerging market funds dropped 6%.

Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets and participate substantially in profits from money invested.