The news is uniformly bad for many hedge funds right now. Sure, there are exceptions, like John Paulson's fund, which has been on a tear. But for most, the combination of short selling restrictions, a severe cutback in leverage ability, consternation about prime brokers, and newly empowered investors has made for a rough month. Oh yeah, performance has been awful. In fact, it's been the worst month in a decade, according to FINalternatives. A great example noted by the Financial Times: Citadel's main fund, which fell 15 percent in September, its worst month since 1994. But there are many others. In some ways, shifting trading rules are merely a convenient excuse. Hedge funds were supposed to do well in volatile conditions. For whatever reason, that's not happening now.

For more:
- here's the FT article
- here's the FINalternatives article

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Navigating the Hedge Fund Maze - September 2008