For some of the hedge fund industry's titans, including Nelson Peltz and William Ackman, 2016 is starting with heavy losses as big bets on General Electric <GE.N>, Valeant <VRX.TO>, and Mondelez <MDLZ.O> have been battered by the market's abrupt drop.

But as a group, hedge funds have navigated the sharp sell-off relatively smoothly, finally boasting better performance than the equity markets they have trailed for the last years.

With the Standard & Poor's 500 index tumbling another 3 percent on Wednesday to push the stock market benchmark down 10 percent for the year-to-date, most investors are feeling pain.

Peltz's Trian Fund Management lost nearly 10 percent in the first two weeks of 2016 while Ackman's Pershing Square Holdings, coming off a 20 percent loss in 2015, tumbled 11.4 percent through January 12, investors familiar with the numbers said.

More broadly though, hedge funds, which oversee $2.9 trillion in assets for pension funds, governments, and wealthy private investors, have lost only 2.5 percent, Hedge Fund Research data show, besting the benchmark stock indices' double digit losses.

The outperformance from hedge funds may be acting as a ballast for the market overall, as those managers seek opportunities in falling shares rather than fleeing, according to some strategists.

"This is going to be a more volatile period of time and there will be excessive swings in the market," said Charles Krusen whose Krusen Capital allocates to hedge funds, but "that will also provide opportunities especially for hedge funds that can act as a buffer when the markets go down," he added.

Goldman Sachs analysts said global hedge funds lost less than 1 percent last week when the Dow Jones Industrials Index tumbled into correction territory, hurt by falling energy prices, China's currency devaluation and fears of weaker global economic growth.

This year's best performing hedge fund, according to industry tracker HSBC, is the Horseman Global fund which is up 10.49 percent through Jan. 13 after having gained 20.4 percent last year.

Early winners this year also include Millennium Management, the $34 billion fund run by Israel Englander which ended 2015 with a 12.7 percent gain. Kenneth Griffin's $25 billion Citadel, which gained 14.3 percent last year, is up again, as is Jacob Gottlieb's $8 billion Visium Asset Management, said people who have seen their performance numbers.