Hedge Funds Buoyed By Equities In April

May 14 2009 | 8:56am ET

Another hedge fund index is offering a healthy dose of optimism for the downtrodden industry. Hedge funds gained 5.05% in April, the largest monthly gain in nine years, according to the Barclay Hedge Fund Index.

“This is the largest one-month gain for hedge funds since February 2000, when the Barclay Hedge Fund Index soared 6.76%,” said Sol Waksman, founder and president of BarclayHedge. “The resurgence of global equity markets in April has given a big lift to most hedge fund strategies. All of the MSCI Barra equity indexes in developed markets and emerging markets posted gains last month, many of them in double digits.”

In April, 16 of Barclay's 18 hedge fund indices gained ground. The Barclay Emerging Markets Index shot up 9.65%, the Event Driven Index gained 8%, equity long bias rose 7.36%, the Healthcare & Biotechnology Index was up 6.14% and technology gained 5.57%.

“Risk appetites among investors seem to have increased in April and emerging markets, which had been shunned in January and February, appear to be a major beneficiary,” said Waksman.

However, the Equity Short Bias Index plunged 7.68% in April and equity market neutral slipped 0.92%. “Equity Short Bias had its biggest one-month drop since April of 2001, when the Index lost 8.55%,” said Waksman. “Hedge funds trading the short side had record gains in 2008, when they were up 40.91% for the year. Although they've given back 10.64% in the past two months, Equity Short Bias is still leading all hedge fund strategies with a 9.88% gain over the past 12 months.”

The Barclay Fund of Funds Index gained 0.63% in April.

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