The Credit Suisse/Tremont Hedge Fund Index was up 4.06 per cent in May, the largest monthly gain since February 2000.
Emerging markets funds were the strongest performers, finishing up 6.96 per cent. The emerging markets sector has experienced a significant turnaround over the last three months as risk appetite returns to markets and investors are encouraged by positive signs of global growth and rising commodities prices.
Convertible arbitrage managers also performed well during May, up 5.81 per cent, as funds capitalized on the overall appreciation in convertible bonds globally. The convertible arbitrage sector has been up every month this year, and redemption pressure seems to have eased substantially as a result.
Others sectors performing well in May include event driven (up 4.22 per cent), distressed (up 4.15 per cent), long/short equity (up 5.23 per cent) and fixed income arbitrage (up 4.33 per cent).
Dedicated short bias did less well, falling 0.55 per cent in May.