The news in the hedge fund industry has been uniformly bad this year, especially in the second half of the year. But while there will be some upheaval and contraction, hedge funds are holding up much better than mutual funds and they remain an integral part of most institutions' strategies. Three Connecticut pension funds, for example, will begin investing in hedge funds despite the industry's dismal performance, reports FINalternatives. Somewhat surprisingly, Connecticut's public pensions have never before invested in such funds. But the state recently decided to allocate up to 8 percent of assets in hedge funds in search of diversification and better returns.

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