(Bloomberg) -- Equity hedge funds are getting a pick-me-up after a harsh 2016, when they suffered almost a third of the industry's withdrawals, amid a global stock rally.

The long-short strategy — the top performer — returned 3.2% in the first quarter on an asset-weighted basis, marking the best start to a year since 2013, according to Hedge Fund Research. Emerging markets had some of the most robust gains, with an average 5.5% return led by wagers in India and China.

Managers benefited from a surge in equity markets in Europe, the U.S. and emerging markets in the quarter after increasing their net long exposure to those markets, according to prime brokerage data. While sustained gains are vulnerable to risks including the presidential election in France, challenges to U.S. President Donald Trump's agenda and rising interest rates, they also provide a chance to make money, according to Man FRM, a unit of Man Group that invests in hedge funds.

"There is a pleasing array of sources of macroeconomic risk and potential opportunity for hedge funds," Man FRM wrote in a note on April 4. "Trading any one of these successfully is rightly difficult (we don't pay hedge fund fees for nothing), but at least this year there appears to be enough breadth of opportunity for hedge funds to potentially prove their worth."

EQUITY LEADS THE PACK

U.S. stocks jumped in the first quarter, with the S&P 500 Index returning 6.1%, while the 16 major currencies tracked by Bloomberg all rallied against the dollar. Investment-grade dollar bonds rose 0.8% and junk bonds jumped 2.7%, according to Bloomberg Barclays U.S. indexes. The Euro Stoxx 50 Index returned about 7% over the period, and the MSCI Emerging Markets Index soared 11%, the most since 2012.

Light Street Capital Management, a $915 million long-short equity fund that specializes in technology, media and telecommunications, surged 20.3% in the first quarter, according to people with knowledge of the matter. The firm, run by Tiger Cub Glen Kacher, benefited from bets on social media, e-commerce and cloud and mobile technologies, the people said. Viking Global Investors, led by another Tiger Cub, or manager who once worked at Julian Robertson's Tiger Management, gained 4.9% this year, according to a person with knowledge of the returns.

QUANTS GAIN

Philippe Laffont's Coatue Qualified Partners, which also invests in telecom, media and technology, gained 8.9% this year, after jumping 3.1% in March, according to a letter to investors obtained by Bloomberg News.

Renaissance Technologies and Quantitative Investment Management, hedge funds that employ quantitative strategies to equity investing, also gained. The Renaissance Institutional Equities Fund jumped 3.3% the year through March, and the Renaissance Institutional Diversified Alpha Fund returned about 4.2%, according to a person with knowledge of the returns. QIM's $915 million Quantitative Tactical Aggressive Fund soared 25.4%, according to a letter obtained by Bloomberg News.

Not all equity managers played the rally successfully. Billionaire Crispin Odey, who's known for his bearish bets, saw his main hedge fund lose 4.8% in the first quarter, following its worst-ever annual decline in 2016, according to people with knowledge of the matter. The Horseman Global Fund, which declined 24% last year, fell another 7.8% in the first quarter. The drop was mostly due to the cost of switching from a bet against emerging markets to backing those assets, while at the same time adding to wagers against developed markets, according to an investor letter.

CHINA FUNDS RISE

Equity and macro managers wagering on emerging markets tapped a rally in developing-nation assets benefiting from a surge in corporate earnings forecasts and economic growth that's outstripping expansion in developed countries. Glen Point Capital, a macro hedge-fund firm that manages money for clients including billionaire George Soros, made 6.7% in March — erasing earlier losses and bringing gains for the first quarter to 6.5%, according to people with knowledge of the returns. Marshall Wace's Global Opportunities Fund jumped 6.9%, according to documents seen by Bloomberg News.

China-focused managers were buoyed by a rally in equities, with the MSCI China Index jumping 13% in the first quarter as the yuan stabilized and concerns about global trade eased. Greenwoods Asset Management's $1.4 billion Golden China Fund soared 10.5% over the period. Springs China Opportunities Fund rose almost 14%, according to a person with knowledge of the matter. Its contrarian stock picks paid off as investors shifted their focus back to company fundamentals during earnings season, the person said.

Others got caught in a wrong-way bet. Emerging Sovereign Group's Nexus Fund plunged 51.5% in the first two months of the year on bearish China bets, Bloomberg reported in March. Its Cross Border Equity fund, which focuses on emerging-markets stocks, fell more than 4% in the first quarter, according to a person familiar with the matter.

MACRO LAGS

While many macro managers struggled with a reversal in the dollar's appreciation against Asian currencies, some bucked the trend. Charlie Chan's $127 million Splendid Asia Macro Fund made an estimated 2.5% in March, taking first-quarter returns to just above 20%, said a person with knowledge of the matter. The Singapore-based fund profited from bullish bets on Asian equities and currencies.

Macro managers gained 0.5% this year, continuing their trend from last year as the worst-performing strategy. Brevan Howard Asset Management's master fund fell 2.4% in the first three months of the year, and Caxton Global Investment fell more than 6%, according to people with knowledge of the matter.

Event-driven funds prospered on "expectations for business-friendly policy initiatives to fuel the corporate activity opportunity set," according to Man FRM. The strategy gained 2.7%, the best-performing after long-short equity, according to HFR. Luxor Capital Partner's flagship fund gained 9.5% in the first quarter, led by stakes in companies including Recruit Holdings, Mindbody and Golar LNG, according to a person with knowledge of the matter.

Jody LaNasa's $1.2 billion hedge fund Serengeti Asset Management, which focuses on an opportunistic value strategy, jumped 13.7% on investments in Argentina and alternative-investment managers.

Representatives from the firms declined to comment or didn't respond to requests.

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