MarketWatch- Hedge funds generated their biggest gains in more than a year in April as stock markets surged, especially in emerging markets. However, some managers are becoming more cautious as benchmark equity indexes hit records.
An index compiled by Chicago-based Hedge Fund Research climbed 2.23% in April, leaving it up 5.14% so far in 2007. Another run by Hennessee Group advanced 1.92% last month, leaving it with a year-to-date gain of 5.44%.
Funds tracked by HedgeFund.net gained 2.61% last month. That was the best April performance since 1999, the industry database operator noted. It was also the biggest monthly gain since January 2006. So far this year, HedgeFund.net’s main index is up 5.25%.
A lot of the gains were driven by surging stock markets in April. The benchmark Standard & Poor’s 500 index advanced 4.3%, its best performance since December 2003. Emerging market indexes climbed even faster, after sharp declines earlier this year.
Emerging markets hedge funds performed the best in April. Managers focused on Asia returned 7.72% on average, according to HFR.
Still, there were signs that some managers are becoming more cautious. The performance of equity long/short hedge funds lagged the S&P 500 considerably in April, suggesting managers have increased short positions to protect themselves from any market downturn.
