Hedge funds on track for best gains in 10 years

HEDGE funds are on track to post their best returns for a decade in 2009, despite the global downturn.<br /><br />According to figures from data provider Hedge Fund Research (HFR), the hedge fund industry is up 18.77 per cent so far this year.<br /><br />An additional return of only 0.79 per cent between now and the end of the year would mean the industry finishes up 19.56 per cent for 2009, the best performance since 2003 when funds posted average returns of 19.55 per cent.<br /><br />Prior to 2003, the best year for the hedge fund industry was 1999, when returns averaged&nbsp; 31.29 per cent.<br /><br />And another hedge fund data group, Hennessee, expects performance in the industry to continue improving right through until the end of the year because investors will defer paying taxes on equity gains until the start of 2010.<br /><br />Hennessee says that over the past 14 years, when equity markets have ended November positively, hedge funds have posted average returns of 1.9 per cent.<br /><br />And the group said it expects hedge fund performance to improve throughout 2010, although it said the&nbsp; return of market volatility would make stock picking more important.