Hedge funds gained 0.32 per cent in October, according to the Barclay Hedge Fund Index compiled by BarclayHedge.

The index is up 6.09 per cent year to date.

“News flows continued to drive the markets in October,” says Sol Waksman, founder and president of BarclayHedge. “Equity markets rallied early in the month on the ECB’s announced willingness to purchase unlimited amounts of Spanish government debt, but weak third quarter earnings contributed to economic growth concerns that caused equity prices to end mostly lower.”

Overall, 13 of Barclay’s 18 hedge fund indices gained ground in October.

The Barclay Distressed Securities Index was up 2.40 per cent, Equity Short Bias gained 1.08 per cent, European Equities rose 1.00 per cent, the Event Driven Index added 0.78 per cent, and the Multi Strategy Index was up 0.57 per cent.

“Distressed Securities funds are benefiting from artificially low interest rates on government bonds that are driving yield-hungry investors into high-yield credits,” says Waksman.

On the negative side of the ledger, the Merger Arbitrage Index fell 1.89 per cent, technology was down 1.81 per cent, and global macro lost 0.81 per cent.

Year to date, the Healthcare & Biotechnology Index is up 13.60 per cent, and Distressed Securities have gained 10.03 per cent. The Equity Short Bias Index has lost 17.15 per cent in 2012. All other strategies tracked by BarclayHedge have had positive returns this year.

The Barclay Fund of Funds Index lost 0.19 per cent in October, but remains up 2.98 per cent in 2012.