Today’s Daily Angle comes from Wikinvest Wire member Richard Wilson of HedgeFundBlogger.com. You can read the full article on Richard’s blog.

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Although hedge funds performed slightly worse than equity markets last month, hedge fund performance still improved. The first three quarters of 2009 are the best in 12 years and, if the last quarter is anything like the first, hedge funds will have made an incredible recovery following one of the worst financial collapses.

Hennessee co-founder Charles Gradante said hedge funds are worried about the market’s rally in light of the economy’s contraction. “Liquidity is driving this market, and that is likely to continue with more than $3 trillion on the sidelines,” he said. “However, liquidity-driven markets eventually dry up.”

The emerging-markets index had the biggest gain among the sectors tracked by Hennessee, posting a 5% rise. Only one index, the short-biased index, saw a decline; it fell 3.1%.

HedgeFund.net said funds’ returns were up 2.7% in September, as total assets under management rose 3% to $1.948 trillion, with performance accounting for much of the increase. Investor flows were positive again for the fifth straight month. So far this year, its hedge-fund aggregate index is up 17% so far this year, the best increase in 12 years.

Hedge funds are continuing to rebound from their worst-ever year in 2008. Funds on average lost about 20% last year, though that was far less than the decline for major stock averages.