Hedge funds snap winning streak with small losses

BOSTON, Nov 6 (Reuters) - Snapping a seven-month long winning streak, the average hedge fund posted small losses in October but still beat the broader stock market, which lost more ground, data released on Friday show.

In October, the average hedge fund lost 0.05 percent, said Hedge Fund Research, one of several firms that tracks performance and asset flows in the secretive hedge fund industry. In September the average hedge fund gained 3 percent.

The broader Standard & Poor's 500 index fell 2 percent while the Nasdaq dipped 3.6 percent last month, also ending their seven-month winning record.

Still, the hedge fund industry's gains since January -- the average fund is up 16.94 percent -- have put the $1.5 trillion industry on track to turn in its best performance in a decade. The rebound comes only a year after the average fund lost about 19 percent in 2008, prompting disappointed investors to pull billions of dollars out of the industry.

The broader stock market has gained still more this year, rising 17.9 percent in the first 10 months of the year.

Top performers during the month were hedge funds specializing in betting that stock prices will fall, with so-called short sellers gaining 3.92 percent.

Funds specializing in asset-backed securities and distressed securities also fared well, with only a handful of strategies posting losses during the month.

Hedge fund industry experts said October's performance numbers could help attract new assets to the industry because they show that hedge funds can outperform other asset classes in falling markets. (Reporting by Svea Herbst-Bayliss, editing by Gerald E. McCormick)