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Hedge funds back on track, says report

HEDGE funds are once again performing favourably now that outflows have stabilised, according to a report. <br /><br />In its latest investment outlook, Swedish financial group SEB says that the hedge fund industry is over the worst, following its toughest year on record in 2008.<br /><br />The report predicts that strong hedge funds will be able to strengthen their positions in 2009, although it warns that smaller and less successful funds will continue to fold as part of an ongoing &ldquo;weeding out process&rdquo;. <br /><br />And the closure of these funds will result in less competition in the industry, with institutional funds and major banks emerging as the biggest winners, the report says.<br /><br />Meanwhile, the Credit Suisse/Tremont Hedge Fund Index closed up 4.06 per cent in May, adding to a raft of positive data for the industry. <br /><br />The figure, which comes hot on the heels of similarly positive data from Hedge Fund Research, means the average fund is up 6.72 per cent so far this year.<br /><br />Oliver Schupp, president of Credit Suisse Index, said the performance was the biggest monthly gain since 2000.