Hedge funds gained 1.79 per cent in September, according to the Barclay Hedge Fund Index compiled by BarclayHedge.

The index is up 5.99 per cent year to date.

“In spite of news that highlighted continuing economic deterioration in the US, Europe, and China, investors remained in mild risk on mode,” says Sol Waksman, founder and president of BarclayHedge. “Equity prices were higher on the month and the US dollar lost ground against the euro and the yen.”

Overall, 16 of Barclay’s 18 hedge fund indices gained ground in September.

The Barclay Emerging Markets Index was up 3.14 per cent, healthcare and biotechnology gained 2.86 per cent, equity long bias added 2.64 per cent, Pacific Rim equities rebounded from two months of losses with a 2.52 per cent gain, and European equities gained 1.62 per cent.

Two hedge fund strategies had losses in September. The Equity Short Bias Index fell 4.23 per cent, and the Merger Arbitrage Index was down 0.55 per cent.

Equity short bias has lost 16.83 per cent year to date. All other strategies tracked by BarclayHedge have had positive returns in 2012.

“Losses in the Equity Short Bias Index are close to surpassing the 18.80 per cent drop in 2009, and are approaching the 23.95 per cent loss we recorded back in 2003,” says Waksman.

The Barclay Fund of Funds Index gained 0.75 per cent in September, and is up 3.19 per cent in 2012.