Bloomberg: Hedge Funds Rose 1.4% in April to Highest in Almost Three Years

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Hedge Funds Rose 1.4% in April to Highest in Almost Three Years
By Kelly Bit - May 6, 2011 2:05 AM GMT+0900

Hedge funds climbed 1.4 percent in April to the highest level in almost three years as stock markets rallied amid rising earnings and the Federal Reserve renewed its pledge to stimulate growth with low interest rates.

The Bloomberg aggregate hedge-fund index rose to 127.99 from 126.21, reaching a mark not topped since June 2008 and bringing this year’s gain to 3.7 percent. Funds betting on global economic trends, long-short stock funds and multistrategy funds advanced.

“The average investor is becoming more and more positive on hedge funds,” said Don Steinbrugge, managing partner of Agecroft Partners LLC, a Richmond, Virginia-based firm that advises hedge funds and investors.

The MSCI World (MXWO) Index of global stocks rallied 4.3 percent in April, including dividends, as higher-than-estimated profits from Apple Inc. (AAPL), Morgan Stanley and 3M Co. lifted markets. Fed Chairman Ben S. Bernanke said last month the U.S. central bank’s pledge to keep interest rates low for an “extended period” means he probably won’t raise borrowing costs “for a couple of meetings.”

Macro funds, whose managers seek to profit from global themes or trends, advanced 1.7 percent in April. Long-short equity funds, whose managers can bet on rising and falling stocks, returned 2 percent. Multistrategy hedge funds increased 1.2 percent.

The hedge-fund industry exceeded $2 trillion in assets for the first time at the end of the first quarter, marking a recovery from record investment losses and client withdrawals during the financial crisis, according to Hedge Fund Research Inc. Funds added $102 billion of assets in the first three months as investment performance accounted for $70 billion and deposits from clients contributed $32 billion, the Chicago-based firm said.

The main Bloomberg hedge-fund index is weighted by market capitalization and tracks 2,772 funds, 1,356 of which have reported returns for April.

To contact the reporter on this story: Kelly Bit in New York at kbit@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net