Hedge funds gain 1% in February (MarketWatch)  (09-03-2010)

SAN FRANCISCO (MarketWatch) -- Hedge funds returned almost 1% in February as equity markets rebounded on optimism about a European bailout for Greece, industry consultant Hennessee Group said Monday.

The Hennessee Hedge Fund Index advanced 0.96% in February, leaving it up 0.42% so far this year. The Standard & Poor's 500 index rallied 2.85% in February, leaving it down 0.95% in the first two months of 2010. Bonds also rallied as the Barclays Aggregate Bond Index gained 0.37%, leaving it up 1.91% year to date, Hennessee said.

"The focus of hedge fund managers was on Greece and its debt level, as well as potential problems in Spain, Portugal and Italy," Charles Gradante, co-founder of Hennessee Group, said. "Some managers see this only as the tip of the iceberg."

Greece, which has big government deficits and lots of debt relative to its GDP, has been the main focus of such concerns in recent months. European leaders have pledged to support the country, which has unveiled tough fiscal austerity measures.

However, Greece's problems have also revived old worries about the euro, triggering a slump in the currency.

Hedge funds have been criticized as speculators by some European politicians and the Justice Department in the U.S. is probing some firms' euro trading activity.

Hedge fund managers are also concerned about government deficits in the U.S. and are betting against U.S. Treasuries, he noted.

Source: MarketWatch