BarclayHedge: Hedge Funds Up 1.31% In April

May 19 2010 | 11:07am ET

Despite growing concerns about the Greek debt crisis, hedge funds pushed ahead last month with broadly positive returns.

The Barclay Hedge Fund Index rose 1.31% in April (4.58% year-to-date), as most hedge funds shrugged off the sovereign debt questions. But they did hit close to home, with the Barclay European Equities Index adding just 0.05% on the month, compared to 1.57% for the Standard & Poor’s 500 Index.

“Rising fears of default in the Euro zone were a negative for European equity markets,” BarclayHedge founder Sol Waksman.

Distressed securities hedge funds led the way in April, adding 2.88% on the month—and 9.52% on the year.

“As investors have become more aggressive in their search for yield, prices for high-yield bonds have continued to increase at a faster rate than investment-grade bonds,” Waksman said. “It’s been an excellent environment for buyers of distressed securities.”

Convertible arbitrage funds rose 2.32% last month, equity long-bias 2.04%, event-driven 1.62% and fixed-income arbitrage 1.65%.

Just one of BarclayHedge’s 18 strategy indices lost ground last month, and it lost a lot of it.

“While most hedge fund strategies have been profitable over the past three months, short-sellers have been punished by broadly rising equity markets,” Waksman said. Short-bias funds lost an average of 5.87% in April, leaving it down 11.2% on the year.

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