Bloomberg – Hedge funds returned an average of 3.2 percent in October, the biggest gain in almost two years, as rising stocks and bets against mortgage-backed securities helped firms including PequotCapital Management Inc. and Passport Management LLC.<\/p>\n
Pequot’s $1 billion Core Global stock funds rose 3.4 percent last month and 37 percent for the year, according to an investor letter from the Westport, Connecticut-based firm. San Francisco-based Passport’s Global Master Fund, with about $2.2 billion, has almost tripled this year after increasing 34 percent in October on profits from subprime mortgages and mining companies.<\/p>\n
The average return year-to-date is 12.3 percent, according to a report today from Chicago-based Hedge Fund Research Inc. Managers who bet on rising and falling stock prices climbed 3.5 percent. They benefited when the Federal Reserve cut the federal funds rate by a greater-than-expected amount in September.<\/p>\n
“Everything from emerging markets to stock funds are doing well,” said George Lucaci, managing director at New York-based Channel Capital Group Inc., whose HedgeFund.net database tracks returns. “That’s because there’s a belief the Federal Reserve is your savior — if things get bad, they will lower rates.”<\/p>\n