When it comes to the value of diversification in a portfolio, all hedge fund strategies are not created equal. According to a study by Investec Asset Management, hedge funds are useful for diversifying a portfolio, but, even with low correlation to a traditional portfolio, some HF strategies produce lower returns than others, with some performing only about as well as market indices. “True diversifiers may be valuable to investors, even if they don’t earn much,” wrote authors Philip Saunders, Max King and Terence Moll, who are members of Investec’s global multi-asset group. Among these strategies are fixed-income, managed-futures and convertible arbitrage funds, according HedgeWorld.com, citing data from Credit Suisse/Tremont data dating back to 1994. The best diversifier of the lot, according to the authors, are short sellers, but they lost about 5% annually for the period studied. “Very few equity hedge fund managers consistently make money on their short book, and for most it serves merely as an expensive hedge,” the authors wrote. HedgeWorld.com noted that the findings are not surprising, given that to make money in alpha calls on the talent of the hedge fund manager and does not depend on market movements. That helps explain why the best performing hedge funds appear to be those with both alpha and beta components, says HedgeWorld.com.