March 2010 was the best month in the last ten for hedge funds and pushed the HFN Hedge Fund Aggregate Index to a new peak, surpassing the prior peak level set in October 2007.
Performance was strong in March and net investor flows were again positive, but below the high rate in February.
Positive returns were driven primarily by rising equity markets and supported by strong moves in energy and other major commodity prices.
Emerging market funds appear to have performed best, led by managers investing in Russia and the Middle East/North Africa region.
The HFN Hedge Fund Aggregate Index was up 3.04 per cent in March 2010 and 3.03 per cent YTD, compared to 6.03 per cent in March and 5.39 per cent YTD for the S&P 500 TR Index.
Total estimated hedge fund assets increased 3.15 per cent to an estimated USD2.257trn.
Investors allocated a net USD610m to hedge funds in March and performance accounted for an additional USD68.25bn, resulting in a total assets increase of USD68.86bn during the month.
The core growth rate (per cent increase in assets due solely to investor flows) was 0.03 per cent in March, a decrease from February.
Hedge fund assets are an estimated USD681bn, below the peak set in Q2 2008.
The average performance from fixed income focused strategies was 2.15 per cent in March. Corporate bond and specifically high yield and distressed strategies outperformed both mortgage and government bond related strategies, though all were higher on average for the month.
The average performance from equity focused strategies was 3.57 per cent in March. Emerging market funds focusing on EQ related strategies produced the strongest returns, but equity fund returns were strong in most sectors.
After a slow start to 2010, CTAs had above average returns in February and were up again in March to turn positive for the year. Funds investing in currencies and oil related commodities performed best in the group, while those investing in the agricultural sector were down slightly on average.
