Thanks to a decent run toward the end of the year, hedge funds fared decently in 2010. HedgeFund Intelligence's Global Composite Index rose 2.3 percent for December and rose 8.08 percent for the entire year. The Hennessee Group says the average fund in 2010 rose 10.2 percent. These calculations do not factor in performance and management fees.

For the second year in a row, hedge funds generally lagged the stock market. The Standard & Poor's 500 index rose 12.8 percent in 2010 and the average stock mutual fund rose 17.48 percent, according to Lipper. For 2009, hedge funds posted a roughly 20 percent gain, while the S&P 500 had a 26 percent gain. Recall that the hedge fund industry--as it should have--was able to trounce the long-only indexes for 2008, when hedge fund indexes fell but only by half of the S&P 500's 37 percent decline.

Reuters notes some of the standouts of 2010: Dan Loeb's Third Point Offshore fund gained 31 percent through December 21, Louis Bacon's Moore Emerging Equity L/S Fund rose 31.7 percent through December 16 and William Ackman's Pershing Square International fund rose surged 20.7 percent through the middle of December. John Paulson has apparently told investors his Advantage Plus Fund gained 17 percent in 2010 while his Gold Fund surged 35 percent.

All in all, hedge funds are poised to have a strong 2011, at least from a fundraising point of view. Performance is always a wildcard

For more:
- here's the article

Related Articles:
Hedge fund inflows, launches to spike
Hedge fund issues in 2011
Hedge funds crave an edge: Technology or info?