U.S. hedge funds made money in September: data

BOSTON (Reuters) - The average U.S. hedge fund made money in September, swinging back into the black one month after posting its first losses this year, according to data released on Monday.

Hedge funds earned 2.26 percent, according to the Hennessee Hedge Fund Index, while Hedge Fund Research found that the average fund returned 2.98 percent last month.

That compares with a 1.31 percent loss in August.

The gain was fueled by a strong rally in U.S. equity markets and is the strongest return since May when the average fund gained 2.33 percent.

"While equity markets have quickly rebounded to new highs, credit markets have failed to recover the entirety of losses suffered over the summer," said Charles Gradante, managing principal of Hennessee Group.

Funds specializing in emerging market funds posted the biggest gains, the two research groups found.

But hedge funds that concentrate solely on selling stocks short, or betting that the share price will fall, posted losses in September. According to HFR, these funds lost 3.14 percent while the Hennessee Group found that they slipped 1.97 percent.

September's gains helped boost the $1.9 trillion industry's performance for the year. Through September, the average fund was up 10.16 percent, compared with a gain of 8.3 percent through August.

However, hedge funds, which often promise to make money in all markets, underperformed the broader stock indexes. The Standard & Poor's 500 index .SPX gained 3.58 percent, and the Dow Jones Industrial Average .DJI advanced 4.03 percent in September.