Best Year for Hedge Funds Since 1999; Venture Capital Suffers

(January 12, 2010) — Hedge fund industry performance in 2009 was the best year since 1999, when funds returned 31.29%.

According to Hedge Fund Research, which tracks a number of funds, its index of fund returns gained 1.25% in December, bringing last year’s gains up to 20.04%. After 2008’s lackluster performance with a 19.03% fall of the HFRI Fund Weighted Composite index, hedge funds prospered with nine months of strong markets in 2009.

Comparatively for the year, the Standard & Poor’s 500-stock index gained 23.45%, the Nasdaq composite index gained 43.9% and the Dow Jones industrial average gained 18.8%.

While hedge funds profited in 2009, venture capital fundraising suffered, with 2009 the lowest fundraising year since 2003, according to the National Venture Capital Association. U.S. venture capital firms raised $15.2 billion from 120 funds in 2009, down 47% from 2008, according to Pensions & Investments.