Hedge funds gained 3.08 per cent in March, according to the Barclay Hedge Fund Index compiled by BarclayHedge.

“Global stock indices reached new highs for the year as economic data continued to suggest that a recovery is underway,” says Sol Waksman, founder and president of BarclayHedge.

“On average, emerging market equity indices gained 8.04 per cent in March, and developed market indices gained 6.29 per cent.”

All but one of Barclay’s 18 hedge fund indices had a positive return in March. The Barclay Healthcare & Biotechnology Index soared 5.15 per cent, emerging markets jumped 5.23 per cent, equity long bias was up 4.03 per cent, distressed securities gained 3.79 per cent, technology was up 3.85 per cent, and Pacific Rim equities gained 3.84 per cent.

“Nearly 87 per cent of the funds reporting their March return to BarclayHedge have recorded a profit for the month,” says Waksman.

At the end of the first quarter, the Barclay Distressed Securities Index is up 6.70 per cent, healthcare and biotechnology has gained 6.27 per cent, Pacific Rim equities are up 4.18 per cent, emerging markets have gained 4.06 per cent, and fixed income arbitrage is up 3.91 per cent.

“Money has been chasing performance, and investment inflows into hedge funds have been rising,” says Waksman. “TrimTabs Investment Research reported that the hedge fund industry posted an estimated inflow of USD16.6bn in February.”

Equity short bias was the one losing hedge fund strategy in March, dropping 6.22 per cent, and it is now down 6.13 per cent for the year.

“In a broadly based rising equity market like we had in March, short sellers are faced with very limited trading opportunities,” says Waksman.

The Barclay Fund of Funds Index gained 1.73 per cent in March, and is up 1.41 per cent year to date.

The Barclay Hedge Fund Index has gained 3.43 per cent in the first quarter of 2010.