Updated with correction on June 1
In a widespread reversal of fortune, many hedge fund strategies returned to modest positive performance in the first quarter of 2009.
According to Morningstar Inc., average performance in the first three months of the year was positive for 68% or 15 of the 22 hedge fund strategies within its hedge fund database. Morningstar data, calculated exclusively for Pensions & Investments, is based on the funds managing more than $100 million from among the 8,000 hedge funds that report data to the fund researcher.
Thats a big improvement over the fourth quarter, when 77%, or 17 of Morningstar's 22 hedge fund style classes, turned in deeply negative average returns.
The average return in the first quarter for all hedge funds in P&I's customized universe was 0.42%.
Hedge funds smartly outperformed traditional market indexes in the first quarter, with the average performance of every Morningstar style category beating the -11.01% return of the Standard & Poor's 500 index and the -12.5% performance of the Morgan Stanley Capital International World index. Only seven style categories all in negative territory failed to beat the 0.12% performance of the Barclays Capital Aggregate Bond index for the three months.