Volatility Returned Briefly in April, Smacking Hedge Funds

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"I think the party's over in terms of returns," said Vidak Radonjic of Beryl Consulting Group LLC, which advises investors on hedge funds. "These guys didn't fare well last year, and they are not going to change overnight."

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Last year, when the market swung wildly but ended the year relatively flat, equity hedge funds turned in one of their worst annual performances of the past decade.

They were down about 8.4% in 2011, on average, according to Hedge Fund Research Inc., the worst since 2008, when they fell almost 27%.