Hedge funds continued to generate strong returns in the first half of the year, up an estimated 6.33 per cent, according to the Absolute Return database.

Hedge funds continued to generate strong returns in the first half of the year, up an estimated 6.33 per cent, according to the Absolute Return database.

June was generally a flat month, up an estimated 0.40 per cent, with about 43 per cent of reporting funds. This year's gain is in sharp contrast to 2008, when hedge funds lost an average of 12 per cent.

On the back of tightening credit markets and a sentiment that the economy - and the housing market in particular - may be stabilizing, the Absolute Return Mortgage-Backed Securities Index gained an estimated 4.61 per cent in June, up 10.31 per cent for the year so far.

Convertible arbitrage is also reporting its best results ever, gaining about two per cent for the month for a year-to-date total of 21 per cent. MBS and convertible bonds were decimated by the financial crisis last year.

Long/short equity funds continue to perform in line with the broader markets. The Absolute Return US Equity Index gained only an estimated 0.08 per cent in June for a total of 6.24 per cent for the year so far.

The global equity, managed futures and commodities indices were all down in June and managed futures is the only strategy down on the year, -1.30 per cent YTD estimated.