A volatile year for hedge funds ended with a bittersweet fourth quarter.

With stock markets in freefall, most hedge funds protected clients from the full brunt of the selloff. But many failed to make positive returns, instead showing a high degree of correlation to major market factors, investors said. Hedge funds lost money in three straight months for the first time since 2008, according to Absolute Return data.

The median hedge fund in the Absolute Return database finished the year up 1.51%. That compared to a 2.30% loss for a middle-of-the-pack American hedge fund using Morgan Stanley as a prime broker, according to the bank’s estimates.

The S&P 500 Index fell 6.20% last year, by comparison, while a diversified portfolio of investment grade bonds finished about flat and short-term Treasurys made gains of almost 2%.

Hedge funds bore some blame for stock market turbulence in October and November. Portfolio managers holding similar long and short bets began liquidating investments at the same time, plunging markets deeper as money exited the system, analysts said.

“The biggest issue we saw in the fourth quarter was huge deleveraging from the hedge funds,” said Larry Fink, the BlackRock chief executive, in an interview with CNBC. “It was a mini 2008-’09.”

Multistrategy hedge funds maintaining tight risk controls held onto gains despite falling with the selling activity. Ken Griffin’s Citadel returned 9.1% in its flagship fund, while Izzy Englander’s Millennium Management finished up close to 5%.

Some of the industry’s top performing funds continued their positive streaks. D. E. Shaw’s flagship fund finished with an 11.20% gain, its seventh double-digit result in the past 10 years. Jeffrey Talpins’ Element Capital Management ended with a return of 17.3% after falling about 7% in the month of December.

But others faltered in the market turbulence, ending the year with steep drawdowns that put a crimp in their profitability. Louis Bacon finished with an almost 6% loss in his Moore Global fund, his worst result since 1994. Dan Loeb and Larry Robbins both finished with double-digit losses in their Third Point and Glenview Capital Partners funds.

Domestic stock picking funds posted the worst returns of any strategy, losing 4.55% for the year, according to Absolute Return data. JANA Partners’ Barry Rosenstein said he would abandon the strategy this month after reporting losses of 8.1% in his main hedge fund, instead focusing on long-term investments tied to corporate activist campaigns.

The bottom quarter of American hedge funds made losses of about 9%, according to Morgan Stanley data. Most stock picking hedge funds produced no “alpha,” or excess performance above a benchmark, across the full calendar year.

“After consistently generating about 2% of alpha [year over year] over the past two years, as per our estimates, [a] diversified allocation of hedge funds underperformed since the summer,” Lyxor Asset Management researchers wrote in a January report.

Years of easy money policy from global central banks frustrated hedge fund managers, who accused quantitative easing of artificially suppressing market volatility. But when volatility increased in the fourth quarter, many found themselves on the wrong end of the sharp movements. Algorithmic futures funds posted some of the worst losses, finishing the year down 1.74%, according to Absolute Return data.

“The comprehensive losses by many leveraged and unleveraged strategies speaks to the risks associated with Central Banks reversing Zero Rate Policy…as global growth wanes,” wrote Mark Connors, head of portfolio and risk advisory at Credit Suisse. “The impact goes beyond performance, speaking to enterprise survival as seen in hedge fund closures and record outflows in U.S. Equity Mutual Funds.

“However, outperformance by the majority of hedge funds in December and persistent outperformance by the top quartile of managers present viable options for allocators looking for managers that can navigate these uncharted waters,” Connors continued.

Q4 Performance: D. E. Shaw, Tiger Global finish strong as Glenview, Third Point falter on Absolute Return.