The cruelest month so far in 2010 was May. Hedge Fund Research's HFRI Fund Weighted Composite Index fell 2.26 percent in the month. The Hennessee Hedge Fund Index fell nearly 3 percent. In both cases, the monthly declines were the worst since the end of 2008. For the year, both indexes are up less than 2 percent.

Big-names were not immune to the decline. Paulson & Co. was hit hard; the Paulson Advantage Fund was down nearly 5 percent for the month. The Paulson Recovery Fund lost about 8.5 percent for the month, though it still up 14 percent for the year.

Despite the losses, hedge funds (hedge fund news) proved their valued in May, as the main stock indexes fell even more. The Standard & Poor's 500 fell more than 8 percent, as did the Nasdaq composite. No doubt here was some hedging and shorting going on. Indeed, short funds fared exceedingly well in May. Hedge Fund Research's short-bias index was up about 7 percent. 

For more:
- here's an article from FINalternatives

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