Hedge funds rode strong markets to a positive return last month, reversing some of the declines suffered during a disastrous March.

Long/short equity funds led the way as the Standard & Poor’s 500 Index rose 4.87%, returning 2.2% on the month, though it remains down 1.99% on the year. Fixed-income arbitrage also had a strong April, rising 2.07% on the year (down 4.85% year-to-date) and convertible arbitrage finished April in positive ground (1.11%, down 6.62% YTD).

“After a difficult first quarter for global financial markets, hedge funds rebounded in April, driven primarily by gains in the Long/Short Equity sector,” Oliver Schupp, president of Credit Suisse Index Co., said. “Stronger than expected earnings posted in the financial and retail sectors helped boost investor confidence, driving an increase in stock prices amid declining volatility. Market uncertainty does persist however, as concerns over rising inflation continue to plague economies worldwide.”

On the losing side were managed futures (down 2.15%, up 8.05% YTD) and global macro (down 1.59%, up 5.19% YTD). But nothing compared to the 7.3% decline by dedicated short-bias funds, which remain up 1.81% on the year.