Hedge funds posted their best monthly performance in nine years, with the HFRI Fund Weighted Composite Index rising 5.2% in May, Hedge Fund Research indicated.
Year-to-date, the index is up 9%. In 2008, it declined more than 19%.
Strategies focused on emerging and emerging markets posted the strongest gains in May, with the HFRI Equity hedge Energy/Basic Materials Index rising 9.64% and the HRFI Emerging Markets Index gaining 9.74%.
After historical lows in 2008, risk appetite has quickly returned over the last eight weeks, suggesting that hedge fund investors are again looking past month-to-month volatility and focusing on the longer-term performance merits of the industry, said Kenneth Heinz, president of Hedge Fund Research.
Following a period of consolidation, we expect industry growth to resume in the coming quarters, with an emphasis on transparent investment by institutional investors, Heinz added.